MW Theory Paper 4 - Marketing

Health Claims *

-Alcohol risks: Its contribution to liver damage, brain damage, and accidents. Also incidence of many cancers, nerve and muscle wasting, blood disorders, raised blood pressure, strokes, skin infections, psoriasis, and infertility increases with high intake, and FAS. -important to drink a little regularly not binge -1991 60 minutes French Paradox (low coronary issues high fat consumption) *Heart* -Heavy drinkers develop increased cholesterol levels as well as raised blood pressure, weakened heart muscle, and a susceptibility to potentially fatal abnormal heart rhythms -Alcohol increases good cholesterol -Flavonoids: powerful antioxidants, prevents platelet clumping in blood -Potassium: counteracts excess sodium (hypertension) and causes it to be excreted -it is the alcohol in alcoholic drinks which has been identified as the single most important ingredient in prevention of cardiovascular disease. -Moderate alcohol consumption improves the balance between the harmful and beneficial forms of cholesterol -Alcohol has two anticoagulant effects which make blood less likely to clot in the wrong place. It makes the platelets slightly less sticky, and it reduces the level of fibrin available to form a clot. -moderate drinkers is increased vascular elasticity, enabling a more rapid flow of blood through the arteries and lowering risk of cardiovascular disease. -The anticoagulant effect of alcohol lasts less than 24 hours. hence, 1 drink a night. -Phenolics, like resveratrol (inhibits not only the oxidation reaction by which LDL-cholesterol is formed, but also inhibits reactions which make platelets more sticky and the lining of blood vessels liable to promote a blood clot.) -A glass of red wine a night may lead to lower cholesterol levels and better heart health for those with Type II diabetes. Ben Gurion University in Israel *Cancer & Antioxidants* -Polyphenols protect against cancer -Resveratrol: phytoalexins produced by plants due to natural stress to protect themselves, antiox, anti-mutagenic, inhibits three phases of cancer, antibiotic actions, -Alcohol consumption is a risk factor, albeit minor, for cancer of the digestive tract (strongest at start of tract) -modest consumption increases breast cancer risks *Lungs* -resveratrol may help to fight chronic bronchitis and emphysema by reducing the amount of chemicals in the lungs that cause the diseases. -asthmatic reaction to wine possible *Headaches* -phenolics, which in the test tube liberate from cells the chemical messenger 5-hydroxytryptamine (serotonin) which plays a part in the initiation of migraine. -Red wines may also contain histamine, which can induce headache in susceptible subjects. *Other* -moderate wine drinkers are less likely to develop various dementias, including Alzheimer's -visual cells of moderate wine drinkers are 20 per cent better preserved than those of non-drinkers and drinkers of beer and spirits -high consumption = weak bones, moderate consumption can protect bones, especially post menopause -moderate drinkers are more sensitive to insulin than non-drinkers. moderate drinking is associated with a significantly lower risk of developing non-insulin-dependent diabetes. -regular drinking increases enzymes in body needed to break down alcohol (binging is dangerous) -Histamine: amines are essential building blocks -Lowers risk of heart disease, thrombosis, Alzheimer's, cancer, leukemia, and excess salt -UK Ellison (health minister) wanted calories on wine and was blocked by EU -ulcers thought to be part of drinking, now known to be bacterial -moderate drinking reduces gallstone formation, gallstone formed from cholesterol wine fights cholesterol ...EX Beringer necker for health but FDA opposed

Consolidation good & bad (2015)*

Consolidation: prestige and big brand, how does rep change in consumer's eyes Consolidation: can limit selection, but increase distribution reach seemingly bringing more variety. ...EX...accelerated in 1980s when Louis Vuitton bonded with Moët-Hennessy to form LVMH -then UK-based Grand Metropolitan (now Diageo) to invest in California wineries -then Paris-based Pernod Ricard to add Jacob's Creek to its portfolio of brands via Orlando Wyndham. ...EX...Global drinks companies' interest rests mainly with sparkling wines, brandies and vermouths, however, which have lent themselves much more easily to global branding than still wines -many companies retreated from wine sector -then second wave happened in early 00s -California's Beringer with Australian brewers Foster's subsidiary Mildara Blass in 2001 -acquisition of Hardy by Constellation in 2003 -carve-up of Seagram between Diageo and Pernod added some wine-specific assets to Castel and Allied Domecq -Pernod Ricard acquired Montana and other main wine brands in Allied Domecq's 2005 break-up -Canadian company Vincor added British and South African acquisitions to its international range of producers in 2004 - Antinori, Gallo, Mondavi -The emergence of large international wine companies and brands, built on economies of scale, and the ease with which technology and know-how can be transferred readily -significant shifts of production from western Europe (terroir) to the globe's cheapest wine regions (brand) (i.e. Central valley and aussie) -The larger wineries aim to produce uniform wines with vertical integration, growing grapes in their own vineyards or having grapes grown for them according to winery set specifications. -part of industry comprised of small to medium enterprises, many of which have found niches in specialty products and branding. Winery tourism is a major contributor for smaller wineries, especially those located in scenic areas or convenient to higher population areas. -Corporate ownership of larger wineries shifts occasionally with international connections across the industry coming and going. ...EX...In 2012 Constellation largest wine company in the world, with Wine Business Monthly estimating that it sold 102 million cases globally (E&J Gallo global sales estimated at 80 million). Bronco claims to have 585 wine partners. Fred Franzia of Bronco says they have more than 50 square miles (32,000 acres) of vineyards planted. Much of its business involves selling grapes to others. ...EX.. 53% of wine bought int he US in 2014 came from 3 companies -The combined dynamics of channel consolidation and increasing competition (characterized by severely declining numbers of wine distributors and by an escalating number of wine SKUs on the U.S. market) have made it much harder for wine businesses to market and sell wine. Eating into winery profits, sales and marketing costs are escalating by 20% to 30% annually, and each year wine inventories require considerable pushing through the wholesale system.

generic bodies (and their success) (2013) (2004)*

Funded: -In full by govt (alcohol consumptions concerns must be addressed) -In part by government, in part by tax to producer -In full by producer by voluntary membership *Must Have* -fully and professionally qualified in marketing, communications, research, and consumer analysis -Cooperative behavior of producers, and industry collaboration -Alignment of laws (DOC, AOC) and desires of producers. Regulation can weaken the generic promotion program -Must define target market ..EX... Wines of Australia targeted casual wine drinkers and now is targeting (drink less and better) -Must adapt to changing market *Strengths* ...EX...CIVC pursues legal action that individual producers do not have time or energy for, massive brand identity -Can throw larger events with more fanfare i.e. large generic tastings ...EX... Tim Atkins MW feels that the sheer size of these generic body tastings can render them meaningless. Can be improved by more buzz, master classes, seminars and smaller, focused stands and tastings -More focused, smaller venue with intimate leading by personality seem to be best for new generation of buyers -Can successful change large perceptions ...EX...WOSA 2006 campaign for 'Variety is our Nature' highlighted Biodiversity push in the Cape during 'Green' fad. -Can address new challenges head on -Strong figure head can bring respect to broader category ...EX... Susana Balbo head or Wines of Argentina WoA "Argentina's growth is in mid-priced wines with real balance." ...EX...Grandes Pagos de España (GPE), formed of 29 single-estate wineries that share the common goal of shining a light on the country's best terroirs and the unique, characterful wines that come out of them. Among the estates in the group are extended-aged Cava producer Gramona, Valdespino in Jerez, the LVMH-owned Numanthia in Toro and Aalto in Ribera del Duero, run by former Vega Sicilia winemaker Mariano García. All of the estates within Grandes Pagos, the majority of which are family-owned, have an annual production of 50,000 bottles or fewer and none of them buys in grapes. The group receives around eight applications a year from wineries keen submit their wines to a blind tasting panel in order to join. Members benefit from joint marketing initiatives and tasting events. In a similar way to the new generation of terroir-driven winemakers emerging in South Africa, there's a community spirit among members of the GPE, with the sharing of technical information and winemaking tips encouraged. Membership costs around €1,500 a year but varies depending on winery size. *Weakness* -To have significant positive effect individual producers must have complementary activities to have successful distribution -As generic bodies raise awareness of wine consumers will enter the segment at the lowest price point benefitting the lower quality producers and risking reputation of generally promoted wine. Generic body marketing only as good as the cheapest producer of the organization -Many float on the work done to promote the region without they themselves joining ...EX...Meritage promotes copy written term, no one but them may use it. Opportunities ...EX...Wine Australia announced it will invest $8.5 million over the next four years in 12 new research and development (R&D) projects. The new projects will be aimed at helping increase demand and the premium paid for Australian wine and increase the grape and wine sector's competitiveness. *Assess the role and importance of generic bodies (such as Wine Australia and Wines of Portugal).* Role: Promotion/Marketing, legal advocacy, producer cooperation, have a target market of consumers Generic Bodies are only as necessary as the value of the work they do Marketing/Promotional ...EX...Wine Australia History, Evolution, Revolution with Doug Frost speaking frankly about the past and how to grow value not volume. Legal Advocay ...EX...Champagne CIVC sues to protect the name - rare example but has been vitally important Producer Cooperation ...EX...Amarone Families showing a strong cohesion of beliefs and supporting a united front This can be the most challenging as it relies on the members to be inspired by the goals of the organization beyond their own needs Target Market ...EX...Important to identify and execute in the appropriate target market for the group as a whole. Pinot Camp hits North American Sommeliers and boutique buyers. How Necessary: Strengths :Can work wonders for producers who are too spread out, isolate, or busy to develop and execute a plan. Important for Brand, marketing, and research. Sustainability WOSA Weakness: Often funded through dues that need to generate enough money to be effective, non memebers may reap benefits while not contribution WINES OF GERMANY Opportunities: Potential to tackle large image issues and lift whole region MERITAGE lifted all red blends Threats: In fighting among producers PINOT CAMP

major brands effect on the industry (2003)*

Major brands: can be a region (Brand Champagne), a style (Brand Argentine Malbec), or a producer (Yellow Tail) Industry: Producers, Trade, Media, Consumers ...EX....Strong brands can bring new consumers into the market, fuel business development, drive mergers and acquisitions and moves millions of euros and dollars. Reka Haros managing partner at Sfriso Winery in Italy *Producers* ...EX...As Robert Joseph, wine writer, puts it, a brand is the most valuable piece of real estate in the world, a small part of someone's brain. ...EX...Barefoot markets itself as an environmentally friendly brand "Respect the Mountain" campaign, etc. Other brands are following suit ...EX...When founder Robert Mondavi established his eponymous winery in 1966, he set in motion a business that would catapult California's wine industry into the modern era. From winemaking techniques such as stainless steel tanks, cold fermentation and French oak barrels to styles such as Fumé Blanc, Mondavi's vision shaped the industry. -Can create homogenizing style or dictate style *Media* -Internal PR and large distribution means they can get a lion's share of coverage as they are relevant and visible. -Brand Champagne has guaranteed media coverage every year and ever defensive lawsuit -Can harm the image of small, historic, artisan image of wine *Trade* - Direction of sales "Every morning we wake up there are 11,000 millennials that turn 21, and they don't view wine as an elitist beverage," Stephanie Gallo -Amarone Families reaching out to trade to show how Amarone is back on it's feet and not resting on its laurels -Well known brands can sell themselves making workload lighter for trade and creating motivation for distributors who make commission on volume. -The vast majority of winemakers are boutique, large brands guarantee they are harder to find and you are enjoying the experience of a few, limits choice *Consumers* -Consumers tend to enter the market at lower price points and with strong brands as a guarantee and familiarity -Bela Szabo, with whom I worked together on some Procter & Gamble brands before getting into the wine industry, shared that a brand's value starts with its purpose, with its "why" -Concha Y Toro 130 year old company currently accounts for 34% of Chile's total wine exports, so if a consumer has had a bottle of Chile wine likely to be theirs -Option of choice is diluted by major brand domination diluting wine's unique character that has held it in good stead for so long. Major Brands: Jacob's Creek, Beringer, Lindeman's, Sutterhome, Robert Mondavi, Yellow Tail, Hardys, Conchs y Toro, Gallo, Barefoot China: Great Wall, Dynasty or Changyu

terroir/ regionality (cooperation) marketing (2011) (2009) (2007) (2001)*

price, product, promotion, and place Strengths, weaknesses, opportunities, threats -historical perspective, and assess consumer knowledge and purchase hierarchy (how important a factor is in making a purchase), all within the variables of price point and geography. *Cooperative/Regional Marketing* -how important regional marketing is in a purchase will vary significantly by price point and geography WEAKNESS ...EX...Sebastien Coquard, president of the Beaujolais and Beaujolais Villages body announced stepping down (10/2015) says that he faced 'threats' to his privacy and was under 'untolerable' pressure. The winemakers recently agreed an uneasy truce with local merchants over prices for the promising 2015 vintage. 'I have constantly repeated, explained and warned that without a fundamental re-evaluation of our economic organisation and marketing methods, we will not succeed in reversing a curve that that has been dropping for over 20 years.' He questioned winemakers' commitment to unity. OPPORTUNITIES ...EX...Oregon State University found that a lack of regional marketing was to the detriment of the Umpqua Valley region STRENGTHS ...EX... A Plus (Australia Plus) and the tag line: "every one has a story." It's a web site where every winery in Australia can submit a photo, a brief story about what makes them interesting, and put a link to their web site. Visitors can browse all the stories, vote on the ones they like the best, and share their favorites with friends. But most importantly they can see the stories. THREATS -not as valuable as varietal or branded wine *TERROIR* -A way to separate boutique wine from industrial wine for product differentiation -Struggles to compete with varietal and branded wine in non traditional markets -Price: can demand higher price from unique sense of place -Promotion: has a story to tell, individual character, recognizable name (benefits some more than orders) -Placement: does not compete well with high volume branding -Product: not necessarily higher in quality but can use tradition and romance to market ...EX...Academy of Wine Business found consumer and producers had different definitions of terroir *Terroir is real?* -'minerality' may come from succinic acid (higher in turbid, warm, spontaneous ferments) -May describe high acidity and absence of powerful aromatic compounds such as terpenes or fruity esters -partial MLF whites may display more 'minerality' -minerals, though needed in small amounts affect organic reactions, enzyme metabolism and yeast activation -Sulfur compounds may play a part ...EX... researchers in Auckland, New Zealand, have confirmed that at least one aspect of terroir—local differences in yeast strains—does indeed alter the outcome of Sauvignon Blanc fermentation. The wines were tested for the presence and quantity of 39 volatile compounds and other standard quality parameters such as ethanol, acidity, and sugar. Regional wines reflected similar results, varying region to region. Nelson showing the most distinct.

Regional signature wines (2013)*

signature wines: a varietal or style that is a hallmark to its region of origin Thesis: Very Important. Emerging and established identities both benefit Intro: -maintained identity in crowded market -easier for growing/emerging markets to understand, greatest growth potential -allows smaller brands under umbrella to differentiate at a level of recognition unattainable on its own -signature wine must be desired by consumers *Emerging Regions* Argentine Malbec -Breakthrough wine -07-10 increased about 88% during financial crisis -5th largest importer of wine into the US in 2009 -2000, Wines of Argentina created an aggressive strategic plan for Malbec, similar to the Australian wine vision (Malbec tracks Aussie Shiraz) -2009 nearly 80% Malbec -small start ups use malbec to get traction, simple pre built message -millennial varietal label, pleasing to former merlot drinkers -backlash threat: not just a fad, quality maintained, trade up happening -Geoff Labitzke MW argues that Argentina is positioned to have an export market collapse - exports fell by 5.5% in the first five months of 2014 alone - following in the wake of Australia. Oregon PN -PN already highly desired identity to grab onto -Identity also played off of Burg for instant quality assumption (or had Burgundy involvement, e.g. Drouhin.) -Oregon Pinot Camp shows unity while getting attention for individual producers -Growth of Oregon wine outpaced the economy after the major recession events in US -treat: tiny volume OR less than 1% of CAs total wine, price prohibitive -make little with high demand supports $, no one would think or pay for OR wines w/o Pinot *Maintained Identity* Champagne Brand Champagne active identity maintenance to ensure seamless message at top price sparkling Brings legacy and images throughout global media to new markets, already understood post economic crisis sales fell in China by 4% and in France by 9% 2012 growth of 25% in India with luxury identity Global familiarity means recognition of brand Champagne, 2013 China recognize on French Champ as 'Champagne', reaffirming More challenges to demand in market (red color of luck, high acid, unfamiliar with sparkling) overcome by image allowing Champagne to tap into necessary market with massive potential Bordeaux Red wine is arguably the most crowded market and Bordeaux had been a consistent icon Emerging markets flocked to Bordeaux due to signature wine being a message of quality Seen as 'the real thing' in region with emerging wine education, easy to understand- classification of 1855 - basically codified BDX as best wine in world. easy to market to Chinese consumer who is obsessed with brand names and historical precedents. Began to explore specific estates within category of Bordeaux, but interest in whole region Because the authenticity of the signature has been breached decline in interest due to fakes Status, red as lucky color, fresh but not shrill acidity, all ideal for Chinese market *Conclusion* Very Important. Emerging and established identities both benefit from signature wines. -maintained identity in crowded market -easier for emerging markets to understand, greatest growth potential -allows smaller brands under umbrella to differentiate at a level of recognition unattainable on its own -signature wine must be desired by consumers *Other notes* -Wine of Chile President Silva plans 5 years research into best Carmenere clones. Feels it is key to growing UK (Chile's largest export market).

internet's role in branding and commerce business (2011) (2007) (2006) (2002)*

-The internet has the potential to influence the success: both volume sales as well as brand awareness -The internet can increase sales through DTC, e-tailer, and flash site channels and provide valuable brand awareness through e-mail direct marketing and social media. ...EX...using big data Enolytics' team worked with Hello Vino to analyse the data of their users, and discovered that Americans start engaging with wine at 4:45pm. Their interest grows between 6:00pm and 6:45pm and then they call it quits about 9:00pm. Saturday at 6pm is prime in NYC. They could identify trends down to the zip code of purchasers. ...EX...Drizzly makes a small packy 10,000$ a day. Specialty stores servicing downtown business districts do 100,000$. Drizzly takes 3-6% depending on the size of the account. ...EX...MachineryLink Sharing like Uber for tractors. Can help producers share equipment but can lead to logistical issues if not enough tractors servicing. *sales* -DTC offers higher margin for producer ...EX...in the USA, approximately 75% margin versus 50% margin through the three-tier system ...EX... According to Vin65 (an e-commerce provider based in Napa), the success of an e-commerce program is directly related to the e-mail membership base. -The second e-commerce sales channel is through "e-tailers" and flash sites. E-tailers, in many respects, are a virtual brick and mortar store. ...EX...wine.com stocks approximately 10,000 SKUs, nearly double that of a specialty wine retailer such as K&L Wine Merchants (San Francisco) -An e-tailer may provide a wine brand virtual shelf space that it hasn't yet earned at a physical retailer. In comparison, flash sites (e.g. WTSO.com) focus on limited time offers for discounted wine. ...EX...However, aggressively discounting (approximately 35% on average) has a negative impact on brand perception, and does not build customer loyalty. ...EX...For example, Patz & Hall (Sonoma) trialed three flash sites, but found customers were loyal not to the brand but to the savings: of the 700 orders placed on one site, only two wine club sign-ups resulted. the internet means a wine brand cannot hide its pricing in different sales channels. ...EX...For example, websites like winesearcher.com aggregate retail pricing across domestic and international markets. ...EX...the value of DTC sales increased by 15.5% in the USA from 2013 to 2014, only two percent of wine is sold online in the USA -Using e-mail direct marketing, a wine brand can target unique content to subscribers based on geographic location. ...EX...subscribers to Culmina Family Estate Winery (Okanagan) receive an e-mail regarding in-store tastings only when it is geographically relevant. This supports existing accounts, while also minimizing the subscriber attrition rate. ...EX...Amazon launches Amazon Sommelier in Japan where you call and get wine advice from a Somm. ...EX...Concha y Toro's corporate CEO for Asia, Cristian Lopez says Chinese online retail is future, they are confident online and trust what they are buying online ...EX...Ebay launching across 45 US states Online auction giant eBay has entered the US wine retail business with the launch of eBay Wine, offering more than 10,000 wines from 30 countries. André Mack will give notes. *Social Media* -user-based content sharing networks, including Facebook, Twitter, Instagram, Delectable, Vivino, and WeChat etc. -promotion and to engage customers, potentially influencing its success ...EX..Constellation says it is easier to get repeat sales from social media campaigns, harder to get new customer ...EX...For example, Banfi (Chianti) uses Facebook and Twitter on a lifestyle basis, developing hashtags such as "#ThanksgivingwithBanfi" to increase brand engagement among its followers. ...EX....Steve Matthiason (Napa) argues that he increased his brand awareness through Instagram, as consumers were engaged by the natural approach he shared ...EX...Social media may not only be an effective promotional tool for a wine brand, but also generate demonstrative return on investment. For example, Arbour Mist (wine with fruit product) generated $1.3m in sales from a 2013 Facebook campaign based on an investment of approximately $200,000. -QR codes are vital in the Asian market, though Bordeaux is pulling back *Business to consumer* ...EX...Krug custom serial #s on each bottle to track production ...EX...Vine Source puts unique tag in each foil, tap and it brings up site, no app needed *Business to Business* ...EX...Cal-China Wine Culture Exchange says Chinese e-commerce is growing rapidly. Says many online sellers in China won't want to work through an importer, so the North American wineries currently lacking distribution in China may have the easiest time finding a niche in China's online sales channel

Appellation importance (2013) (2004)*

-defining the territory in which it can be produced, viticultural practices and grapes allowed, wine making techniques and the organoleptic qualities a wine must have in order to belong to that appellation. -an appellation is how countries categorize their wines into specific grape-growing geographical regions. -An appellation not only indications the country and region where the wine's grapes were grown, but also the laws and regulations that dictate how that particular wine was made -AOC shows winemaker as a steward of the land's expression, New World thinks man is the most important aspect of expression *Strengths* -Safeguards against frauds, protects regional brand -Appellations are also useful to conquer new market shares, to keep and consolidate the markets already conquered and to avoid to losing market share -Paolo Lasagni, managing director of Bosco Viticultori says around 80% of Prosecco sold in the UK is own-label - "The strength doesn't lie with the producers, it lies with 'brand Prosecco'," he said, adding, "It's a problem in Italy, a lot of producers don't know how to build a wine brand." -France supplies the benchmarks by which almost all wines are judged, impart because so much of it's wine is AOC and therefor of a certain quality ...EX...JayRo "The millions and millions of Chardonnay vines planted around the globe owe their existence to white burgundy - just as their Pinot Noir equivalents depend on someone's memory of a great red burgundy. The produce of the Champagne region in the north east provides a model for every single bottle of dry fizz, no matter where it is made." *Weaknesses* ...EX...Jay Ro "It has been difficult, however, for France to come to grips with the modern, fiercely competitive, tirelessly iconoclastic and innovative wine world." because of AOC -In 2009 Asuz Essencia disposed of due to confusion with essencia. -guarantees what is in bottle, not overall quality ...EX...While KWV's controll of SA wine meant a smooth transition with centralized power to appellation in meant that the appellations had little meaning as quality was low. -Argentina lots of regions showcasing same varietals, hard to make a case for, Lujan de cuyo in Argentina exception for distinct Malbec (exact embodiment of rain shadow, high alt) - but do people care? *Opportunities* ...EX...Working within the system France and Spain now have country wines that will allow them to enter new markets and gain back lost market share (consumers always enter a category at a low price point) it will also allow them to compete with NW wine while building consumer relationship with App system in baby steps. It gives them a greater ability to follow fads while still protecting top apps from faddism. -NW may claim not to care about terroir or apps but continue to introduce them ...EX...Gimblett Gravels is a trademark belonging to producers' association instead of area to avoid skirmishes. No tasting panel to avoid crippling law suits. Instead annual case is put together by Andrew Caillard MW and sent for reviews. *Threats* ...EX...Many in Rioja are against Spanish country wine as it commercializes ordinary wine that takes advantage of the the Spanish reputation without contributing quality -potential to limit innovation -App system cannot move fast enough to accommodate new science and techniques leading more producers to work outsode the system and lessening value of App (DOC/DOCG gold standard until super tuscans, now IGT holds weight) -The new AOC laws 1/2016 allows table wines to be made and sold anywhere in France without the need to indicate its geographical area of origin, only the grape varieties used. Vine-planting is now assumed to be legal across Europe unless a good reason can be found to stop it, however new vine plantings in France will be restricted to 8,000 hectares a year. ...EX...2013 France 45% AOC - 33%IGP - 13% VDFrance ...EX...2014 Italy 33% DOC/DOCG - VDT 26% - IGT 35%

Up and coming regions (2008)*

*China* -in 2014 produced 11 million hectoliters to USA's 22 -desert in Ningxia is being transformed with billions of gallons of irrigation and hundreds of millions of investment -Ningxia, Sichuan and Hebei provinces have little competition from other crops -Shandong Province is the largest producing region, on approximately the same latitude as California, 300km south of Beijing. Also notable is the startlingly remote Liaoning wine region, whose eastern border adjoins North Korea. Here the progressive Changyu Wine Company, China's largest wine producer, identified conditions highly suitable for the production of ice wine, and began planting 5,000 hectares in 2001. -Xinjiang region, where vineyards are grown around the Turfan Depression, about 500 feet below sea level ...EX...Karen MacNeil, author of the Wine Bible, blown away to see wine country near the Gobi dessert Ningxia. Area has 50+ wineries. "There are about 80,000 acres of vineyards planted in Ningxia. By 2020, they plan to have more than 160,000. That's more than three times the amount in Napa. Napa did it in a century. Ningxia only took a decade." -28 million dollar Chandon co-owned by LVMH giving the region confidence -Ningxia vines must be buried in winter by hand and irrigation raises sustainability questions -planting in China surged in 2012 so may be big boom of mature vines hitting market in next year *Georgia* -After Russia introduced an embargo on Georgian wine in 2006, Georgian winemakers found new markets in the West -Many Georgian winemakers still produce wine the traditional way. Grapes are fermented in a qvevri, a beeswax-lined clay pot buried underground (natural wine movement). Orange wines have brought the spotlight too -Georgia's premier wine region, Kakheti -500 indigenous varieties, 95% of wine made from indigenous varieties -an enviably strong wine and hospitality culture, national belief in its wines, a wide range of high-quality indigenous grape varieties, a unique tradition of fermenting a small percentage of its wines in qvevri, and no shortage of historically established terroirs *Moldova* -It has real potential for wine quality and range, thanks to its extensive vineyards, temperate continental climate, and gently undulating landscape -Moldova is the world's most vineyard-dense country -home to the largest wine cellar in the world, Milestii Mici, where over two million bottles are stored. -indigenous varieties, which account for 10% of the vineyards - Winemaking accounts for 7% of the country's exports -monastery history and culinary pairings -no winter protection needed, minimal and rare irrigation, lots of cheap and available labour (90% hand done), old vine age *Greece* -Large EU investment saw big advancement of style and quality of Greek wine -retsina revival as well as high quality indigenous grapes, assyrtiko -great export opportunity even in hard times -natural wines, biodynamic, organic -small producers *Romania* -Romania is 13th among global wine producers ...EX...Pinot Evil -At the moment Romania has 250 registered wine cellars, but only a little over half of them are active in producing and selling bottled wine. Some 30 wine cellars also offer wine tourism. -Major tourism growth in last 5 years -5 to 10 wineries opening a year

export management (2013)*

*Core Tasks* -relationship management with distribution channels in foreign markets -communication -Time Mgmt: time zone changes -Reliable and efficient: follow up and promises -Understand culture ...EX... Lucky #'s in China 28= quick success, 14=instant death -account for local competition and building intl. image -increased margins (depressed currency) are good reasons to export *Customer Service/ Marketing* -follow up -more competition since it is not local -Harness internet to bring brand closer to market -Be prepared/knowledgable: meet the market, know channels -Personal relationship: easy to work with, bigger results from interaction beyond internet ...Philip O'Connor used existing contacts from Lurton Family of wines to launch new Acaibo *Clerical Work* -follow the monthly sales performance of each country/distributor making sure they reach their annual target -understand presence/lack of gov subsidies affects price and intl promotion -exchange rate important -import tariffs, higher sales tax potential -label requirements -expect delayed payment (60-90 avg, but may be 120 days), culturally determined -govt boards (monopoly) (Canada, Sweden, Norway, Finland, Iceland) must submit for listing, get picked up or rejected, then ruling stays until next listing *Marketing* -conduct sales promotion plans and marketing activities in partnership with their distributor in the given country in order to increase awareness of their product hence generating more demand. -They conduct yearly tastings in most of their markets anytime a new vintage is released. ...EX...Kermit Lynch supplies geeky tech sheet well suited to their customer ...EX...Laureate Hospitality Education (LHE) offers degree in export management. Swiss and business education through accredited programs in Switzerland, China, Spain, Australia, the UK, the U.S. and Jordan. ...EX...first US brands to export Mondavi/Fetzer/Wente. Gallo first to put staff and big investment behind exports

effective marketing (2012) Social media (2015)*

*Effective Marketing* -Creating 'events' and guerrilla marketing ...EX...Beringer launches taste strips in 20 states at Kroger grocery store after study that housewives pick items based on samples. ...EX...Banrock Station went for green image, even attached tree seeds to necker to reinforce -The ten trends important to consumers identified by Wine Intelligence are: instant, play, devotion, upgrade, custom, trust, transparency, wellbeing, mini and fusion. "As consumers become increasingly savvy with regards to the brands they interact with, it's more important than ever for businesses to understand exactly what their consumers expect from them," -Information overload and an abundance of choice in our living and working lives is driving consumers to want to narrow their focus, which has led to a rise in both single dish restaurants and, more recently, single cocktail specialists that focus on doing one thing wonderfully like The Gibson in Old Street. -Keenly aware of the value of things post recession, consumers now want the money they spend to go further, and are seeking more bang from their buck in everything from food and drink to fashion. ...EX...in 2008 South African winery Stormhoeck. The winery contacted wine bloggers over 21 years of age and with at least three months of blogging experience, and asked if they wanted to receive a bottle of wine to taste. no requirement that the bloggers had to write about the wine. 6 months later, over 100 bloggers published tasting notes and mentioned the wine on blogs globally. Stormhoeck then hosted a series of wine dinners in the UK, Spain, and the US to encourage personal interaction with the bloggers and prospective customers. The result was that wine sales increased from 50,000 cases a year to 300,000! In addition, Microsoft contracted with Stormhoeck to create a special wine for its 79,000 employees in 102 countries. Many other examples are available online. *Social Media* -networking between people and organizations -Such networking shares, creates, discusses, and proliferates information in both textual and visual form -leading to fewer permanent wine columns and paid wine-writing positions. Increasingly, wine experts and consumers alike share wine information and opinion via social media channels such as Facebook, Twitter, Instagram, and wine blogs -social media use to be consumer generated, more and more company generated - general democratizing of authority, dispersing it broadly across online networks - less on expert authority, and more on crowd-sourced information -the influence of any particular person or media source can change much more rapidly than in the past -charismatic but not necessarily expert can achieve prominence -the impact of traditional marketing approaches such as ad campaigns simply seeking circulation numbers is less clear - integrate social media with information technology that tracks social media users' mentions of wine in general and specific wines, as well as their wine-based travel -Producers can respond directly to consumers who mention their wines. -The proliferation of information online has also increased general discussion about even small-production and relatively obscure wines among consumers. Thus the democratization of wine information via social media has also encouraged consumers to experiment with a wider range of wines. ...EX...CRAFT magazine says social media analytics is deeply valuable and why they will remain a digital wine mag.

Current Ethical Dilemmas in the Wine Biz *

*Environment* -drought ..EX...Water table in Central valley so low ground level is losing elevation with its collapse. -sustainability for future -climate impact (shipping, changing landscapes) ...EX...Packaging in non glass to save transport fuel, but dangers of alternative packaging production (aluminum smelting in craft beer) *Labour* -Bulk shipping taking jobs away from where needed -immigrant workers ...EX....in South Africa, 1,000 jobs were lost in 2011 as two bottling plants closed ...EX...Denis Malbec favours manual sorting as a "social winemaker:" "I like to work with people, hire people, [and] participate in the local economy." -backlash to documenting means more illegal activity ...EX...International Business Times 1/14 As eastern workers flooded the region wages began to fall and contract labour companies sprang up paying only 2-3 euros (they are working extra off the book or wages negotiated by naming them a 'partner' of a faux firm). Workers from Bulgaria, Macedonia and Romania end up homeless in Canelli ...EX...Gallo is looking to mechanize as much vineyard work as possible due to labour issues: both cost and compliance ....EX....The cost of manual labour is highly variable. Australia has a high minimum wage of $19.06AUD/hour for a skilled vineyard labourer, whereas in Chile the minimum wage is the approximate equivalent of $2.87AUD/hour. *Health* ...EX...Pontet-Canet using biodynamics "How many children has biodynamic winemaking poisoned? None" -Breast cancer, pink washing, -Drunk driving, wine rarely the problem ...EX...Helen Mirren straight to camera address in Bud ad. -Russia imposed a broad ban on alcohol advertising in 2013, though exceptions were granted for domestic wines in 2015. France's Evin Law goes a step further: to praise wine and boost consumption is prohibited. -Toxic and illegal pesticides found in Bd. children in Spring of 2016 ...EX...Bordeaux was recently found to be one of the highest consumers of pesticides in France: 3,320 tons are sprayed annually in the Gironde. 132 schools are adjacent to vineyards in the Gironde; one study found children were exposed to over 40 pesticides *Financial* ...EX...Fetzer believes sustainability is not just environmental but financial too -Constant mergers and concentration of the industry is putting wealth with a few and creating ethical market issues for consumer choice. ...EX... Total Wine executive running for office willing to 'spend whatever it takes' *Fraud* -the French co-op Vinovalie was recently caught illegally blending red and white wines to produce rosé, contrary to EU regulations. -widespread exaggerated, deceitful, or erroneous marketing -The University of California found that 60 percent of wines studied understated their alcohol by volume by 0.42 percent. -Dishonest claims of being "non-interventionist" or "farming organically, but without the certification" *Wine Journalism* -wine samples, entertainment, travel, accommodations, and conflicts of interest can create issues of transparency ...EX...For example, in 2011, Pancho Campo of the Wine Advocate was accused of taking large fees to facilitate Jay Miller's visit to certain Spanish wineries ...EX...Natalie Maclean, Canada's most read wine writer, requires wineries to subscribe to her website to have wines reviewed

pricing on the world market (2002)*

*Facts of Global Consumption* -Exports have doubled over the past 20 years: with Europe maintaining its position as the global leader, exporting 58% of its annual production -The newer wine-producing countries (New Zealand, Chile, Australia and South Africa) have increased their export volume by 370% -The United States has overtaken France as the world's foremost wine consumer, with average annual consumption of 12 litres per person -Europe still accounts for 50% of wine consumption worldwide -84 of the 100 most famous wine brands in the world are French -value is increasing as opposed to volume recently *Scarcity pricing* -Jean-Luc Thunevin, owner of Château Valandraud and godfather of the garagistes. 1991 with the first vintage of Château Valandraud, 100 cases. prix de sortie for Valandraud 2005 was €165 -Bob Holder, a wine industry accountant at G & J Seiberlich in St. Helena, they can vary from $1,000 a ton at the low end up to $10,000 a ton from the very best land. -Burgundy and Champagne, small areas, defined space, expensive price per hectare ...EX...Burgundy v.y. price 2014, to 4.35m euros per hectare ...EX...Champagne 1.2 million euros in the Marne and a little less in the neighboring Aube department at 1.1 million euros *Cheap Trap* -Australia critter wine, result of massive irrigation that was unsustainable. -NZ avoided this trap in general die to high demand and low production ...EX...Argentina relied heavily on value priced Malbec ($12-14 retail) then massive inflation made production of this wine unwise ...EX...-Prosecco, 2014 ran out of stocks, 2015 desperate to close contracts at harvest, grape price are likely to rise this year from €1.20 per litre to €1.75 -Paolo Lasagni, managing director of Bosco Viticultori. Stocks for New Year 2015 questionable, shelf price expected to rise by 20% on shelf as bulk price doubles. ...EX...2015 Moscato 2015 harvest was down 20-25% due to lack of rain for some producers, stocks need replenishing in better sites to meet regional demand, government approved escalating reserve allowance to stave off shortages, more calls for regional cooperation *Bulk Wine* -profit may be pennies per liter, an advantageous exchange rate can swing the global market in your favor (weak currency) -In CA post recession saw bulk shortage, early 2000's. Planted grapes of early 2000s finally reached maturity bringing value of CA bulk wine market to 15 million gallons in 2014. Now projected that value will grow not volume and central valley vineyards will shrink - especially due to water shortages -Spanish wine exports have boomed in recent years, especially after the country's 2008 financial crisis. Since 1995, Spanish wine exports have tripled. Last year, exports grew 22 per cent to 2.3bn litres, helping the country surpass Italy as the world's biggest wine exporter by volume. But at the same time, revenues have not kept up. In 2014, revenues actually fell by almost 3 per cent, to €2.6bn. That is because 55 per cent of the Spanish exports were unbranded bulk wine that was often bottled and marketed — and sometimes exported again — by companies in France and other European countries. Spanish bulk wine exports were up 35 per cent in 2014, but the average price per litre was €0.40, below other major wine-producing countries. -US producers have substantial existing inventories of bulk wines and are less interested in imports now, even if prices are attractive. The demand for wines selling for $9 and less has been declining in the U.S. market in the last two years and large harvests in the Central Valley have reduced the need for imports substantially. The strong dollar has probably kept bulk wine imports from falling even more but foreign currencies would have to plunge dramatically to make higher bulk imports attractive.

cult wine brands (2002)*

- Typically a small production label makes a series of great wines, few wine big shots - who know each other get into it and the wealthy buy it up driving up prices and making waitlists. -Love Parker -Sometimes a single buyer buys up a whole lot *California Cult* -1990s ultra premium priced wines -Often made by consultants -Made from prime plots and super selection -Brand dilution major concern, can only be top top so selection gets more and more severe. -tend to focus on grapes and styles that are beloved (often high oak cab) ...EX...Crushpad means that ultra wealthy can buy top grapes and have wine custom made and packaged to sell to wealthy contacts. Cult Vines co-founder Michael Cochran did this. ...EX... Andy Beckstoffer's To Kalon Vineyards 'cult vines' for cult wines. *Micro Chateaux* -Ultra modern, deep color, early maturing, sweet, oaky, flattering reds -few 100 cases, ultra high selection -Warm short ferms -maceration and MLF in bbl -mini filtration -15-18mo in 100% new oak -Michael Rollan -Le Pin archetype and only one with sustained demand ...EX....Au bon Pasteur *Today* -The economic crash hit a lot of cult purchasers -Now there is focus on building prestige while avoiding cult pitfalls (small customer base is a risk) -Classics, rather than fads important for China -Many can't grow in volume so they grow in price ...EX...In response to this more complex environment, a few wineries are growing profits by actually getting smaller in volume. One of the most visible of these is Joseph Phelps Vineyards. In 1991, the winery was annually producing in excess of 120,000 cases of wine and had 26 products in its portfolio. Today, production is slightly under 90,000 cases and more than 80% is in three wines that are sold only through the three-tier channels. The three wines are Le Mistral ($25 retail), a Syrah/Grenache blend from Monterey County; Napa Valley Cabernet Sauvignon ($45); and Insignia ($125), a Bordeaux blend. But because of a strategy extremely focused on advancing quality, dollar sales have more than tripled and profits have soared — an unusual result among today's marketing schemes. ...EX...Krug cult followers 'Krugistes' ...EX...Screaming Eagle's distribution. So sought-after is the wine that almost 90% of it is initially sold direct to a certain subgroup of wine collectors ...EX...Many natural wines are becoming cult, small volume, and French somms are keeping ultra captain's lists

marketing of being green (2011) carbon footprint/ environmental reduction strategies (2010) (2008) Appearing natural*

-Analysis of the results of the Decanter World Wine Awards 2015 showed organic wines, in fact, obtaining a lower medal rate than the average for all wines (64.9% compared to 70.02%), though biodynamic wines managed to match the average (70%). *SUSTAINABILITY* ...EX....Fetzer to use worms and biodigester to recycle 100% of their waste water in 100% closed loop system. Energy savings up to 85 percent over current wastewater treatment technologies and optimizing water conservation measures in support of the fight against climate change. -Sustainable products now 10% of the market (Meininger) -Customer generated demand -Pleasant for the winery (Fetzer) -Need to understand which practices are better versus replacing one pollutant with another -Includes a human and business aspect too -Many definitions of sustainable ...EX California Sus Wine Program (SWP) from 2002 measure current and shows improvement, 490 page workbook, self assessment tools, regular SWOT analysis, CA wineries direct financial assistance to program, voluntary program ...EX SWNZ, NZ reviewed global schemes and adopted Swiss scheme (Wadensill), 95-96 pilot program then got sus wine grant of $150,000 to create SWNZ ...EX South Africa IPW 1993 guidlines finalized in 97, points system based on criteria0-5, must earn 75 out of 50 ...EX Assie AWIS, 2005 ...EX EU IP going back to 1977 integrated in 1993, 10 sections, vineyard oriented ...EX...Fetzer's main focus after being bought by larger company. Helped build CA sustainability cert. *ORGANIC* -Organic and biodynamic in Europe is booming -New Zealand early to this in New World -Power of term organic can command higher price regardless of no quality improvement with mainstream organic drinkers -Annual increases in sales of organic wines of 20% (Canada), 18% (Sweden), 10% (Holland), 8%(Denmark), 7% (Italy, Switzerland), 5% (Austria, France) and 4% (USA) are revolutionizing the industry in these countries (presented ProWein 3/15) -profound developments with these wines today is their broad based and mass acceptance. ...EX...Adam Morgenstern, co-founder of the Organic Wine Journal, wines No longer in own section, mixed in with all other wines -organic as a farming protocol, and there is organic as marketing. Some wineries engage in both, and some wineries pursue one and not the other. -Many organic growers just make organic wine without certification, organic is part of brand identity not sticker (way to stay out of organic section) ...EX...Between 2002 and 2011, (Eurostat figures) Spain's area of vineyards under organic cultivation ballooned from 16,000 ha to almost 80,000 ha, while France's share went from 15,000 ha to 61,000 ha and Italy's from 37,000 ha to 53,000 ha over the same period (these three countries account for 73 per cent of world organic production). Since 2011, though, the growth in organic vineyards has been slower, and in some areas the number of organic grape growers has dropped. ...EX...For all that, organic wine still seems to be an attractive proposition for consumers, with around 35 per cent of regular European wine drinkers drinking organic wines, according to a September 2015 survey prepared for Millésime Bio ...EX...The main reason for choosing organic wine in France and Sweden is that it is 'better for the environment' (or so over 70 per cent of organic-wine consumers in each country believe). In the UK, by contrast, some 46 per cent of organic-wine consumers said their main reason for purchase was that 'organic wine tasted better', outscoring any other motive, and over 50 per cent believe this in Germany. ...EX...Vintage Roots turnover had surged 20% in the last two years, following a three-year "flatline". *Marketing as Natural* ...EX... Duval-Leroy Champagne going vegan to appear more natural ...EX.. WoSA 2006 pushed biodiversity image of Cape wetlands with diversity of wine style message ...EX...Banrock Station went for green image, even attached tree seeds to necker to reinforce *Carbon Footprint* -A carbon footprint is defined as the level of greenhouse gases (carbon dioxide CO2 and methane) caused by an organisation, event, product or individual. -Champagne Drappier has laid claim to being the first Champagne house to reduce its carbon footprint to zero after a 10-year effort. 45% of the electricity used by the House is produced by solar panels ...EX...Viña San Pedro biodigester plant to turn wine waste into biofuel giving winery 60% of it's power

Charity and Brands*

-Money has to come from somewhere. Can be made up in purchasing power, taking it out of cost of production or raising price. -Potential to be part of brand's identity, if chosen properly can be powerful marketing, differentiation ...EX..Banrock Station went for green image, environmental support charities, even attached tree seeds to necker to reinforce *Purchasing Power* -Benefit Wines began in 2006 began creating charity fund raising wines with famous athletes such as Dan Marino, David Ortiz, Ken Griffey, Jr. and sold over 65,000 cases of wine and donated $1 million in just 18 months. Winery direct buying is key *taking it out of the cost* -Murphy-Goode "Homefront" Red, California $12 Muphy-Goode's Homefront red is a big, luscious blend of syrah, merlot and other red varieties—a great burger or steak wine. It was created to benefit Operation Homefront, which provides assistance to the families of service members and wounded veterans. Fifty cents from every bottle sold goes to Operation Homefront—they're hoping to reach the goal of donating $300,000 to military families in need. *raising price* - Worthy Cause Marketing used by Barefoot in late 80s, money here instead of marketing. Marketing fees would have been built into bottle. *Benefits Production* -Symington's in Douro rescue and rehabilitate birds of prey. Help keep vineyards clear of pests and important to local eco system *Sheer attention* -Hospice de Beaune action an icon of wine, 2015 record breaking as money pledged to recovery of Paris attacks. *Breast Cancer* -Research consistently shows that drinking alcoholic beverages -- beer, wine, and liquor -- increases a woman's risk of hormone-receptor-positive breast cancer. (National Cancer Inst and Komen) -Handcraft "Inspiration" White blend, California $10 -2010 Wine Sisterhood "Courageous" Cabernet Sauvignon, California $10 -Pink washing concerns "A company or organization that claims to care about breast cancer by promoting a pink ribbon product, but at the same time produces, manufactures and/or sells products that are linked to the disease."

short term vs. long term marketing (2010)*

-Though it may seem that short-term marketing efforts are bringing in all the sales, it's really the result of both marketing types combined. -In order to create consistent sales cycles and a positive growth trend businesses usually engage in both short and long term marketing efforts. *Short Term* -These plans focus on the upcoming quarter, half-year or one year's worth of marketing activities. -Short-term marketing efforts tend to cause sudden sales spikes which rarely last. These sharp sales increases are usually the result of a targeted marketing campaign or time limited offer. While short-term marketing produces sales, long-term marketing efforts must be mixed in to sustain sales. -Each marketing activity is listed, along with when it will be enacted, what will be done and to whom it will be promoted. Quantifiable goals, such as the number of direct mail pieces sent or people reached through print advertising, are included to assess the success of short-term marketing plans. -Short-term marketing is also useful for test-marketing new products or split-testing to find the appropriate price point. -PPC: pay per click campaigns usually drive traffic, but once ended little residual affect -Advertising needs to reach a critical mass/saturation and may be expensive -Discounting, as we have seen this can become dangerous long-term -Online Mentions: forums, newsgroups or within trade organizations can result in a traffic or sales surge. ...EX... 100 point score from Suckling 2005 Aldo Conterno Barolo "Granbussia" Riserva meant instant and huge demand. Shortsighted excitement meant selling direct for some importers and damaging distributor relationships (Volio Vino) needed for long term success. ...EX...Australia Today Tour to discuss the present and future of Australian wines driving immediate sales of cool buzzword wine, but also long term change perceptions ...EX...Bordeaux En Primeur Le Bon Pasteur sells all wine in a matter of days *Long Term* -Long-term marketing plans look beyond a one-year period, often focusing on five- or 10-year periods. -support the company's overall business objectives. -Long-term marketing strategies should be evaluated annually and adjusted according to changes in customer demographics, economic outlook and overall sales projections. -Company and brand story telling -preparing and optimizing a website for search engines. Currently the majority of Internet surfers seeking a product or information look to search engines. Most Internet surfers use keywords to search for the product, service or information that they are looking for. Knowing your audience and optimizing a site for keywords and phrases that potential consumers would use in their search for a product or service is critical to being found on the Internet. -A stream of fresh content will result in long-term quality sales. Fresh content that is posted, communicated, and experienced on a regular basis will encourage return customers so vital for success. -Cross Publishing Similar Articles: Related industry articles will result in genuine interest from a very targeted and wine audience. Over time, articles can define a company's expertise on a subject area. Ultimately, syndicated articles can build confidence with prospective customers and a level of trust. ...EX...Champagnes ability to constantly innovate and improve while marketing their history. Veuve Cliquot story is known by every wine professional while they also appear fresh every year with subtle changes in line with philosophy instead of fad chasing ...EX...Industry Strategy/Vision 2020 - in 2000, Wines of Argentina created an aggressive strategic plan, similar to the Australian wine vision. Funding it via a "tax" to all winery members. Goal of achieving 10% of global wine market share by 2020 .

distribution strategies, relationship and management (2012) (2006) (2005) (2002) (2000)*

-What type of distribution intermediary (wholesaler, retailer, franchise, broker, direct sales force) -What level of intensity -Due to consolidation number of US distributors has shrunk 60% in last few years (http://academyofwinebusiness.com/wp-content/uploads/2013/04/Zhang-Bouzdine-Chameeva.pdf) -Wineries must have effective relationships with distributors to gain access to channel and continue to have distributor support to move the product at the retail level -"the taste of the wine", "the dependability of the supplier" and "the price of the wine" important -little incentive for them to work together, no shared goals, dis has most power currently -The problem of product misallocation may arise and result in surpluses in some channels and lost sales opportunities in others -wine exporters are familiar with the distribution channel in the mature markets, which are more straight and short - new developing wine markets are in process of building their system and therefore imply different kinds of channels. Wine exporting to these countries appears to be puzzling and bewildering as it is also combined with the different drinking cultures. -DEVELOING: prefer Restaurants, Convenience, Specialized retail -MATURE: Direct Sales, Hard discount, Retail, supermarket (imports begin to match domestic) -Vineexpo 2013, report by wine intelligence --Off-trade 72% vol 60% Value of wine sold world wide but growth is 1.4% --On- Trade growth 6.6% --67% of French consumers buy wine at super/hypermarket remained unchanged 2007-2011, on-trade is slowing --US super/hypermarket grew 20% --US on-trade grew 20% --China on trade grew 46% --Sweeden on-trade continues to grow --Customer Risk Reduction: tools that help describe profile of food paring so customers don't take home wine not to their taste --Connexion: e contact --Theatricality: visual stimulation --New Sales Model: flash sales, specialists, clearance websites, wine in unexpected places, impulse buys --Ultra Niche Strategies: expertise based with small focus ...EX...US 3 tier system and state laws means Fetzer can change dist any time in CO but has franchise laws in Boston. Expensive to dist, each state as own country, so imp to pre research. ...EX...Latour 2012 announced leaving en primeur system, ready to drink, cellared, and better authenticity goals of change. benefits avoid speculation, cost lose out on excitement of en primeur ...EX...Pay to play is required in Germany explained by Weingarten Coop, Wurttemberg ...EX...Concha y Toro's corporate CEO for Asia, Cristian Lopez says that Chinese market is fragmented with o nationwide dist. They are savvy about buying online ...EX...Many buyers demanding not to take big portfolio dumps- instead buy al items individually The Co-op's head of BWS, Simon Cairns, has claimed. better for customer

profit vs. volume (2011) (2003)*

*Public or Privately owned* -Private may take longview on ROI but have limited cash flow -Gallo is privatley owned willing to invest in fixed capital for economies of scale and self reliance (sand mine up to dist) -Publically traded often want their 15% pop for investors can lead to short term cycling of quick turning products, can also lead to high quality long term investment LVMH *Distribution and Brand Awareness* -PR hard at small volume, small dist channel can limit awareness, PR too expensive for small guys per unit unless cult wine -High volume can help with dist, easier to get press over large areas, higher awareness and repeat visibility triggers sales ...EX...Gallo gets own division and in US 3 tier this is vital *Growing by getting smaller* -Port, family owned and in hands of few families. Means increasing volume cannot support cost, instead must work towards quality to demand higher prices and create profit needed to support education and create close connection feeling with producer that allows demand of higher price. Hard to achieve critical mass in category with limited brands ...EX...Joseph Phelps knew that it could not win price game, decided to grow profits. Could make better wine to ask more $ of. In 1991, the winery was annually producing in excess of 120,000 cases of wine and had 26 products in its portfolio. Today, production is slightly under 90,000 cases and more than 80% is in three wines that are sold only through the three-tier channels. ...EX...Argentina relied heavily on value priced Malbec ($12-14 retail) then massive inflation made production of this wine unwise. Ortega's Massimo line discontinued for this reason. *Go Big or go Home* -BoB and Grocery store brands allow for large volumes with a smaller profit to make money up over a large volume. -Because price is biggest driver it can be dangerous, only sustained by competent winemaking -Veuve Clicquot offers large discounts for volume drops. When a product is seen as similar price and volume may be the way to wine ...EX...Yellow Tail accounted for 11 percent of all U.S. imports in 2005. The warehouse structure in the upper right corner can store 900,000 cases of wine at a time, filling 30,000 bottles per hour *Bordeaux Both Sides* ...EX...Garagistas make far less, can always sell out, can ask more due to rarified volume. ....EX...The Caves de Rauzan in Bordeaux co-operative cellar has the dubious accolade of being the largest producer of appellation-level wine in the world, churning out nearly 25 million bottles every year. As a co-operative they can turn nothing away, but each load of fruit is graded by quality with a convoluted bonus system in operation to try and incentivise quality over quantity. ...EX...Bordeaux the Courselle sisters work hard to add value for their customers at Château Thieuley hitting mid tier with quality above basic, but not hitting the high mark. They make profit by combing value and volume. *Both Sides Now NZ* ...EX...Most Gisborne grapes are grown by farmers who sell them to wineries under long-term contract, or to the highest bidder. Several Auckland wineries buy Gisborne grapes and ship juice or wine to avoid extraction of unwanted phenolics that might result from shipping grapes. ...EX....Gisborne At the other end of the production scale are many small lifestyle wineries that make only premium bottled table wine or traditional method sparkling wines. They include Millton Vineyards, New Zealand's first certified organic winery, which now produces grapes and wine according to the principles of biodynamics.

growing small retail (2007)*

*Struggles* -Harper's survey finds 30% of indies turning over 1 million pounds, but 14% are turning over less than 50,000. Also found 15% saw growth of 20% but 12% saw decline of 10% -27% of indies in the UK employee no staff but the owners -Over 50% of indies in the UK are paying staff within 10% over minimum wage -53% of indies in Harper's poll said price competition from super markets was squeezing them out, second thing was cash flow ...EX...Many buyers demanding not to take big portfolio dumps- instead buy al items individually The Co-op's head of BWS, Simon Cairns, has claimed ....95% of small retail in S.A. goes out of business (The South African Council of Retailers) monopolized control the issue. *Legislative* -US 3 tier system and distributor exclusives put small shops at disadvantage - Ban sales at supermarkets ...EX...Sunday sales in Colorado saw wages and staff grow by 10-14% but sales stay flat. -Encourage small producers gives rise to small retail -Deals appropriate for small stores -Tax breaks for small business ...EX...some argue sales in Grocery dilute selection through distribution. In MA Urban Grape thrives because only plonk in grocery stores. *Internet* -Crowdfunding -Majority of indies in UK 2/3 only use online sales for 10% of business. A mere 20% of indies say it makes up 30% of business. -Ability to bring 'personalization' so important to millennials ....EX...comfort with online purchases in Asia, Cellermaster Wines Hong Kong has online site to do most business. Specialty and back vintage Aussie in crowded market. *Growth through profit* -April 2015 Fast Company said growth is vital for small companies in a downward climate when others are not growing -2 ways to grow, volume or profit, indies can grow through profit by earning more -Higher wine education in a plus worthy of higher cost, limited knowledge in large retail ...EX...Badie in Bordeaux offers high service at higher price, but if you were solely driven by price you would not be there. *The power of coming together* ...EX...March for the Independents, Harper's first event of its kind, saw independent wine merchants, suppliers and expert panellists come together to share business insight, best practice, and debate the opportunities and challenges they face. -Social media -small consortiums

power in the wine market lies with (2004)*

*Not producers* -The combined dynamics of channel consolidation and increasing competition (characterized by severely declining numbers of wine distributors and by an escalating number of wine SKUs on the U.S. market) have made it much harder for wine businesses to market and sell wine. Eating into winery profits, sales and marketing costs are escalating by 20% to 30% annually, and each year wine inventories require considerable pushing through the wholesale system. -Distributors and retailers are exacting costly "favors." Marketing directors invest larger and larger sales allowances into sales programming, distributor management, and bonusing, and sales teams direct an ever more significant effort into building key account relationships. This environment is particularly detrimental to smaller wineries that have very little muscle with three-tier distribution channels. *Yes producers* ...EX...In response to this more complex environment, a few wineries are growing profits by actually getting smaller in volume. One of the most visible of these is Joseph Phelps Vineyards. In 1991, the winery was annually producing in excess of 120,000 cases of wine and had 26 products in its portfolio. Today, production is slightly under 90,000 cases and more than 80% is in three wines that are sold only through the three-tier channels. The three wines are Le Mistral ($25 retail), a Syrah/Grenache blend from Monterey County; Napa Valley Cabernet Sauvignon ($45); and Insignia ($125), a Bordeaux blend. But because of a strategy extremely focused on advancing quality, dollar sales have more than tripled and profits have soared — an unusual result among today's marketing schemes. -2015 Bordeaux solid/good vintage. Brexit threats means buying may not be strong. Ch happy to hold in cellars knowing it will fetch good price eventually - negociants little power. *Not Trade* -limited access to wine due to problematic distribution systems ...EX... 3 tier in US means only large brands get through -pressure for discounting from customer and rising competition -risk of fraud -high regulation and liability -managing of low paid employees with high turnover *Yes Trade* -relatively quick turn over -house brands producing big margins -squeeze producers for direct buys -total control of access to good to public *Not Media* -lots of noise to cut through as online media grows -low pay -always need to have new story, not classics *Yes Media* -shape the consumer's and trade's perception -can set the standard and shape production of entire sectors -low overhead, no perishable stock *Not Consumers* -only allowed what has funneled through system -beholden to what works for dist and retail -often pay large mark ups -little ability to have demands heard *Yes Consumers* -Millennials in particular: There are more Millennials at the wine bar than any other age group, edging out the Boomers by a few seats. They comprise 36 percent of all wine drinkers, Boomers 34 percent, Gen Xers 18 percent and Oldsters 12 percent. -More personalized choice than ever ...EX...steakhouse M in the City offers diners the chance to choose their table before they dine in an airline-style online booking system. -make entire industry possible -can reap benefits of deep discounts if willing to consume what is available *Yes Distributor* -gatekeepers of the market -often squeeze producers -can service brands offering them best incentives -Negociants en Primeur can hold info private and obfuscate data within their culture. They make money as a fulfillment house (esp pre econ collapse) *Not Distributor* -feel pressure to deep discount -large infrastructure (legal and warehouse) -constant contract negotiations -dealing with producer pressure -dealing with account pressure -Negociants forced to buy to get future vintages,

Winery Size

-small wineries (less than 100,000 cases per year) -Medium sized wineries (100,000 to one million cases a year) -Large + 1 million

low alcohol wines (2012)*

-youth more strapped for cash, it's a price value -can consume more without adverse effects -natural swing away from big CA cabs and oaky Chard -tighter drunk driving laws -intentional reduction in yields for higher alcohol costs money and raises alcohol, opposite true for Low alcohol -diet conscience -desire for finesse and subtlety -better food pairing -in 1990-2010 power was more important than freshness, now opposite -3-8% considered low alcohol -AWRI show that between 1984- 2008, the mean alcohol % red rose from 12.4 % to 14.4 %, white 12.2 % to 13.2 % METHODS: -halt fermentation early (Moscato) -use lower sugar grapes (Vinho Verde) -adding water, popular and legal in CA (effective and cheaper) -technology (spinning cone, RO filter) -larger crops (CA again) says that more crop per ha is better for the environment and business -later ripening grapes that require the whole season (CA) TAXES -EU law says wine needs to be taxed the same no matter the strength, push against this to help low alcohol wines in popularity for peoples health, counterpoint is that people may drink more as a result. -UK wants tax break for 5.5-8.5 % wines ...EX UK low alcohol sparkling already has a break (Moscato) 5.5-8.5 % 1.84 p. in excise duty per 75-cl bottle, compared with 2.43 p.for sparkling wines up to 15.5 percent. -less than 8.5% not called wine by OIV -USA 14% is the tax break between levels of alcohol ...EX Accolade Wines, Brand Phoenix, Gallo and Percy Fox heavily investing in wines < 5.5 % taxes may be radically reduced ...EX 1994 "Consumer Acceptance of Low Alcohol Wines" published in Montpellier at Ecole Nationale Supérieure d'Agronomie siting reasons for change but fear of acceptance by consumer ...EX in 2003 research in Aussie at Charles Sturt said consumer have poor impression on the taste of alcohol reduced wines (#1 consumers were women, #2 people who have wine with food) ...EX NZ low alcohol project -- a massive initiative researching "lifestyle wines" for driving and calories ...EX Constellation in NZ making 9%abv wines without tech to reduce alcohol, impossible in CA, problem in marketing (seems altered) ...EX Constellation Brands study of regular wine drinkers in the 8 countries that buy the most wine showed 38 % have bought lower-alcohol wines and would buy them again, while another 16 percent would try them (1/15) ...EX Skinny Vine from Skinny girl doing low alcohol wines for dieting ...EX Duncan Selbie, the head of Public Health England claims a glass may be equal to 3 shots of vodka depending on size/strength (12/14) ...EX NPR touts German Riesling, Vinho Verde, and Txakoli ...EX "We're seeing [from our stores] more requests for more balanced, light-bodied, lower-alcohol wines," Devon Broglie, sommelier and global wine buyer for Whole Foods ...EX some interest in Brazil for dieting ...EX...About 1000 bottles of Bannockburn Riesling, produced by Central Otago winery Felton Road, failed to even make it to European shores after it was discovered the alcohol content was too low. The winery's 2015 Riesling had an alcohol level of 8.44 per cent, which fell below the 8.5 per cent threshold set by the European Union.

old world vs new world marketing: Advantages & Dis (2009)*

*Old World Advantage* -romance -historical image -labeling terms with weight ...EX...Champagne vs Korbel -Capturing style in one word ...EX...18 grapes in CNDP -Named for place means using best varietals each year not compulsively 2012 Bordeaux Merlot best as rot forced early picking -Long long history ...EX...Bollinger has an archivest to produce historical story based marketing *Old World Disadvantage* -dreary labels -complicated place names and non distinct brands -seriousness can be intimidating ...EX...Louis Latour labels hard to tell top end from low end -Emphasis on terroir, may not be real, becoming more vague in time *New World Advantage* -Varietal labeling -compelling and exciting labels -high design lifestyle brands -approachability -innovation *New World Disadvantage* -critter wines damaged reputation -sillyness factor ...EX.... Plunger head Zork -can lack weight or ability to demand high price

PR and wine branding (2005) (2000)*

- building consumer awareness without the use of direct advertising, and the use of media to convey a message to the consumer -pay off in terms of delivering key marketing messages, generating media ink and positive coverage -If not pay off excessive expenditure *Successful PR* -avoid last minute cancellations to events -Events well conceived from top to bottom, beginning to end. -Get feature articles -Generates social media -Increased reputation -Conveys and strengthens the key points of difference or marketing messages for the brand/winery through every element of brand experience -Achieves the agreed-upon defined goals, which assumes that one has to have specific goals for an event before promising any sort of result. -Offers a fair return on cost for the brand or winery in terms of desired goals *Major and Small Brands* MAJOR -major brand, PR is generally one of a number of consumer marketing initiatives. PR must be part of the marketing mix, used to reinforce brand values through association -PR must be focused on the local market and that a major brand will therefore require a different PR approach in each market -Send out bottles for review -Oversee media material per brand -Act as brand spokes person when staff cannot attend ...EX...Gallo has internal PR program that demands creative and compelling but also on-brand, consistent in terms of style, quality and tone of voice. ...EX..Florence Rogers-Pinault Director of PR Ch Latour, owners daughter, represents the winery at social and tasting occasions. Brings personal story to forefront of marketing by bringing authenticity. Runs PR and marketing firms. SMALL -Story development important for both, but especially small brand that requires word of mouth spreading for brand awareness -small producer, PR is often the only form of marketing that can be afforded -More specific niche audience to match to ideal customer instead of sweep -Reflect character of brand -Thinking about costs, payout, the tangible value of the event goals and making sure there is full comprehension among company leadership is time well spent ...EX...Sevenhill Cellars in Clare valley hire Paul McKee former ABC journalist and PR manager to focus on only their winery. Can be a fun job for those wanting to relax at end of career. ...EX...Small brands Adhesive LLC "We're smallish, powerful and nimble. We make our clients nervous with our ideas. We think it's healthy. No one ever had record breaking sales or became admired as a brand by playing it safe." ...EX...VinorPR Italian and only specializes in social media *Questions for a PR strategy for Event* -What exactly do we hope to get out of this event? -What are the actions we want guests to take following our event? -Are these expectations reasonable? -How will we make the event unique to our brand/winery? -Why will the media/the trade/consumers/wine club members come? Will the timing of the event make sense in light of our goals, other competing events, and the business (or media) cycle? -Are we out ahead of an upcoming trend with this event or following in a parade of similar events that might not be as compelling for media? -Will the budget we have been given allow us to meet the desired goals, or is it unreasonable? -Do we have adequate staffing resources for the event and if not, can we secure an outside vendor? -Is the management of the winery/brand able to host the event easily? -Is it a good fit for him/her/them? (For example: Are you suggesting a black-tie event for a vintner who is really only comfortable in jeans and cowboy boots? Is the event team expecting a shy vintner to become Johnny Carson for the evening?) -If considering an outdoor event, is there a backup inside location where the event can take place? How would moving it affect the quality of the event? -What other logistical surprises might occur, and are there ways to work around them? *How to get most out of PR Event* -Have at least three key goals. Agree on how event results will be measured as the event is beginning to take shape. -Ask the tough questions listed above, and make sure things are as much of a 'fit' for all involved as possible. -Make the event compelling to media if that is your primary goal. Compare the value and anticipated results of a large event with other alternatives for garnering media coverage. -Do research in the year prior to the event to see what types of events are being written about and how. When you see a feature article, ask how it came to be if you know the public relations person behind it...connect the dots. Many features come from one-on-one pitching—not events! -Get invitations out at least a month prior to the event, if possible. Try to check the calendar for other wine events that might keep media from attending yours. -Confirm and then confirm again. Make it tough for someone to cancel, but remind leadership that media (and other important people) do cancel. -Involve multiple key audiences, if possible, so that you are diversified in your event investment. For example, create an event for trade, media and consumers so that you have potential benefits with more than one key audience. ...EX...April 17, 2011 was the first Malbec World Day with more than 72 events held in 45 cities across 36 countries and created critical mass. In 2015 even added film fest element to keep fresh and feel paparazzi esq. Put on by Wines of Argentina. Generates social media getting people to promote for them. ...EX...Eclipse PR in SA campaign with Wine Tourism South Africa pushing wine tourism as it brings in wealth and then spreads the story. #KLINK awards campaign for tourism generated by public social media drives buzz while increasing feeling of participation so important to millennials. Awards include 'Most Unusual Attraction on a Wine Route' and 'Most Green Wine Farm' to 'Best Deli on a Wine Farm'.

encouraging consumer trade up (2006) less, better, and more expensive wines (2000)*

- drink less drink better -Fall of table wine market in France and Italy as people drink on less occasions but drink better -In France In 1980 more than half of adults were consuming wine on a near-daily basis. Today that figure has fallen to 17%. Meanwhile, the proportion of French people who never drink wine at all has doubled to 38%. -Danny Brager, Nielsen, 'Beer, wine and spirits are growing faster both in volume and in value than the overall consumer packaged goods in the United States' -Annual share of US sales of sparkling wine were up 9 percent by value, 5.5 percent by volume for 2015 -Wines below $7.99 a bottle represent almost 60 percent of the volume sales in the US market, but that percentage is shrinking. It is down almost 7 percent by volume and nearly 6 percent by value. -The fine wine category expects the strongest growth and is defined as $20 and above per bottle. Price creep keeps going up as consumers accept quality wine at increasingly higher price categories, said Amy Hoopes, chief marketing officer and EVP of global sales at Wente Family estates. ...EX...The Wine Economist sales of wines above about $9 are strong and growing while the below $9 segments are stagnant or in decline. Thinking back to the dismal state of the wine market a few years ago, with trading down and heavy discounting, the current situation comes as a big surprise. The best argument for trading up is that consumers who had an opportunity to sample better wines during the deep discount days and liked them now are feeling more economically secure and are continuing to buy them at higher prices. Theories for change: -Millennials: except they don't buy enough wine to shift the whole market. The main buying power lies with wage earners ages 35 to 55, such as late boomers and Generation X. As millennials age, pay off their student loans and become more affluent, their impact will be felt in wine as through the rest of the economy. -One very interesting theory is that the relative quality of wine below about $9 has fallen, driving customers away in search of something better to drink. They have found it, too, in craft beers, ciders and spirits. (Vat, Packaging, Duty, Retailer Margin, logistics leaves little for wine quality cost in low price bands. -Upmarket, branded, non-commodity wines. ...EX...The Wine Group use to make Franzia, now they make Cupcake -Inflation in Argentina makes exporting cheap Malbec un-feasable, therefor upmarket wines being exported and consumed in US -Falling oil prices mean more money for wine globally -Great recession had more people drinking and eating at home. They were not spending restaurant prices and getting better wine at higher then usual prices

Wine as an investment (2010) (2002) (1999)*

- investment funds that focus only on wine as well as 3 wine stock exchanges that are chock-full of potential investment gems -dozens of professional storage solutions for long-term aging to secure investment (internal theft concerns) *Getting Started* -worst case I can drink it -Be prepared to wait at least 5-10 years -Must buy a minimum of 3 bottles as auction houses sell in 3,6,9,12 bottle lots. 12 bottles preferred -Wine storage lockers at a professional facility holds 7-9 cases and costs $18/mo -May buy the bottle and store in bond, meaning a bonded warehouse that allows you to avoid excise tax (20% for UK auction houses) -plan to start with $8,000 to cover storage, insurance, hassle of selling at auction, and buy a meaningful amount of wine -Wine Investment Fund in London requires a minimum of a £10,000 for a startup expense. -Have clear wine investment goals *On Your Way* -buy age worthy wines that will be in demand -If stored in a wooden case buy wine by the case and keep a paper trail to ensure it is not fake. -If buying French wine you must make it easy to sell on the international market -If not buying Bd, Burg, or Champ buy flagship wines with established producers ...EX... The Grange at Penfolds great success, following with St Henri to offer other wine collecting/investment brands ...EX...Cult wines like Saxum in the US have boomed but are riskier as they may not stay in collectors minds or fashion. *Wine Auctions* -In the US most likely to sell investment wines at auction ...EX.. K&L and Christies are top respected US auction houses -Commission may range from 0% (store credit) to 20% at the high end -minimum consignment of $1,000-10,000 -Online bidding may allow you to accept or decline a bid *Wine Stock Market* -UK: Berry Bros. & Rudd (BBX), London International Vintners Exchange (Liv-ex) and Cavex -focus on top Bordeaux and handle logistics -Wine is stored in a professional bonded warehouse, remain in warehouse until tax paid -These wines are very interesting to international buyers, restaurant, and brokers -You may never see your wine ...EX...Liv-Ex quite stable, little loss in 2012 crash, fall from 2013-2014. Things looking up with reasonable 2014 vintage pumping some good energy into market. *Risk* -Market is totally unregulated -Fraudulent companies and boiler room scams -Wine quality is not static and can be eroded through improper treatment -Wine bottles break -Temptation to drink it -Fakes may be purchased -Fakes may erode the whole market -Fine wine risk assesment ...EX...The director, Scott Elliot Andrews, 26, of a fraudulent wine investment firm, Capital Bordeaux Investments (CBI), has been banned from running a company for 11 years after conning at least 10 people out of £60,000. The company falsely claimed to have been operating since 1995, despite the fact that its director would only have been six years old. The investigation into the company found that at least 10 members of the public paid a total of £59,750 to invest in bottles of fine wine that never even existed. -Must time your sell well ...EX....Veuve Cliquot 200 year old bottles sold for 18,600 GBP a piece (in middle of 2012 crash - had expected more than twice more). -Smart to buy minimum 1 case, 2 in good vintages, of single producers from a specific region/sub region. You would build up 20-25 cases over 5 years and then hold for another 2-4 years before selling -Be sure it is understood how the wine will be handled in a divorce so that it does not lead to lost paperwork or poor storage ...EX...England's High Court has ordered Prestige Fine Wine Ltd to be closed in the public interest after a hearing that also included allegations that the firm used false data to persuade people to invest in wine, including an elderly man with Alzheimer's.

hotel and restaurant branding (2011)*

-much higher margin -reinforce brand image -remain in customers mind after experience -Ready customer data for effective marketing -When deciding whether to start your own private-label wines, it is important to think about what you are hoping to achieve. Do you only want to sell your wine at your restaurant, or at retail stores as well? Are you trying to promote an obscure wine or grape that is special to your restaurant? Are you seeking out an opportunity for additional branding? All of these questions are important to consider, as they will help shape how you go about creating your own private-label wines. -First and foremost, it's critical that you choose a winery partner who can match your sales volume. Especially if large, high volume. If small can handle small orders -If you're unsure of how much wine you sell, or if you are a new restaurant, hold off on private-label wines for now. -When choosing a winery, it's important to have data on your wine sales so that you have a better understanding of your customers' wine preferences, the average price they are willing to pay per bottle, and your restaurant's potential for growth in wine sales. -The worst possible scenario is to be stuck with hundreds of cases of unused wines that you cannot sell back to the distributor. -ask an importer or distributor you already work with for some recommendations on wineries who might be interested, or who have made private-label wines in the past. -keep an open mind and get lots of samples from different wineries to try. -Make sure it matches your food and drinking occasions -It's important to work closely with your winery on label design. There are numerous details that need to be included, and many times, the information is dependent on the wine's country of origin. -Try to buy in batches, if you must take it all at once store with dist for correct temp storage if possible -It's a wonderful way to encourage customers to expand their palates ...EX...At Carmine's restaurants, private-label wines are biggest sellers. Offer wines in several varietals, such as Pinot Grigio, Chianti, and Prosecco, as well as magnum bottles of Montepulciano and Trebbiano, which gives diners a choice between many popular varietals. ...EX...NYC hotel Refinery offering own label NY wine ...EX...KDM's Private Label Wine programs assist retail chains, restaurants, hotel/resorts, wine shoppes, trade shows and corporate events in creating high-quality, custom wine brands. "For Food & Beverage Operations, house branded wines are critical branding tools for Restaurants, Caterers, Hotel/Resorts — but also generate higher-than-norm margins for the house — for bottle sales and for wines-by-the-glass." ...EX..."This is one example of hotel brands extending their 'footprint' and therefore their engagement with their guests by making themselves about more than simply lodging," says Chekitan Dev, an associate professor at Cornell University's School of Hotel Administration and author of Hospitality Branding. "By keeping themselves 'top of mind' ...EX... Hyatt Hotels & Resorts teamed up with Napa's Folio Fine Wine Partners to create its own private label, Canvas, which is served at its restaurants and available for sale at www.hyattathome.com and at the winery. ...EX...Sheraton Hotels and Resorts has started a wine club in partnership with Chateau Ste. Michelle. Starwood Preferred Guests can redeem points for membership in the club. ...EX...JW Marriott Hotels and Resorts JWM Wine Club with Treasury Wine Estates in Napa Valley. Members can choose two of four wines each quarter shipped to them. The shipments come with tasting notes from a JW Marriott wine ambassador and complementary recipes from a hotel executive chef. Each shipment costs $150. The company's research has shown that guests value experiences when they're away, particularly if they involve food and wine. ...EX...Sheraton's internal research showed that 66% of guests would be more inclined to buy wine while traveling if there were a premium wine program offered. They would also be more likely to pay $12 to $16 for a premium glass of wine rather than $6 to $8 for a house wine. ...EX...Macaroni Grill .....Huge margin potential

implications of a short harvest (2014)*

...EX...Cool weather smaller harvest 2015 for UK wine compared to record 2014, limits ability to promote the region -Short term and long term -across the whole market -Models are needed to help producer better predict yield goals, or more industrialization will occur hurting farming traditions -prices usually go up -has potential to raise quality -can stabilize falling prices -can help with global over production as people drink 'less and better' -cost is higher to farmers, will the market pay more? ...EX...2015 Moscato 2015 harvest was down 20-25% due to lack of rain for some producers, stocks need replenishing in better sites to meet regional demand, government approved escalating reserve allowance to stave off shortages, more calls for regional cooperation ...EX...Aussie 2007 harvest was down for white 52% and red 35%, affected low value bulk wine to Europe, helpful to manage inventory surpluses in Australia from previous years, caused by spring frosts in Limestone coast and Coonawarra, dry and sever winter and spring induced drought, water restrictions inland districts of Riverland, Murray-Darling River, and Griffith that limited irrigation of those grapes ...EX... Extreme drought in 2015 in Nor Cal has given tiny yields, as well as early and uneven 'hen and chick' ripening, Domaine Carneros began early picking on July 31 with 25% reduced yield, Flowers was 3 full weeks ahead, instead of picking over a month they are picking in a week, Raj Parr had the shortest harvest window yet 6-7 days, Hen and Chick means fewer ripe berries concentrating flavor but heavy sorting at winery since clusters have mixed ripeness, early harvest means retained acid, premium producers will absorb the costs instead of rising prices, bulk wine price will stabilize as it had begun to fall 2013-2014, may hit individual wineries but in general small volume is welcome to even out surplus, ...EX... Harvest in EU 2012 10% drop in production, France 20% drop, drought in the south and cold and wet in rest of EU, At the time global drinking was up, grape prices were up, and bulk prices were up, but economy was down, this followed high selling 2009 and 2010 and inventory needed to be filled. 10/2012 ...EX...Can put pressure on barrel stocks in fortified wine. David Bruce Fonseca says that Tawny stocks are vital to be managed based on harvest volume.

Middle men and brokers (2013)*

-'courtiers' in French *Role with the producer* -middlemen act as go-between vine-growers and merchants as producers often don't have same business acumen -Agents who connect wine buyers to winemakers -May nurse stable of producers -Less competition for attention with brokers products than typical in wholesalers portfolio (greater mind share for small brand). -Once brand grows broker risks losing, they get own sales force or dist attention -They earn commission from producer -they do not purchase anything. A dist does. No risk of bad debt, no accounts receivable. ...EX...Le Bon Pasteur sells all wine to 2-3 courtiers and then the business is off their hands. ...EX...Ch Moussas feels Courtiers are absolutely necessary in Bordeaux and wineries cannot take burden of sales infrastructure. ...EX...SHelby Perkins of Perkins-Harter feels direct sales earn her more money and supply personal conection *Role in the market* -Some small accounts prefer brokers to wholesalers, they are more important to them. Better service. -brokers can act like wholesalers: offer sales organization direct contact with retail, often rep # of brands. -brokers can act like sales and marketing companies, manage relationship between producer and wholesaler, manages wholesalers sales force -Often found in diverse markets, to build volume through the noise ...EX...Large retailer in US like working with brokers since the laws are complex in each state and a local agent will know them all - AppleJacks and Binny's ...EX...Shanghi's CBN Weekly reports that post austerity measures, with growth on e-commerce, has meant lower margins for brokers but many are holding out in hopes of volume ...EX...Wente hires hand sellers to act as locals in stores and recommend the wines - they are specialists not the big box stores *fine wine brokers* -Those who sell from a list of glamorous properties and vintages which may, but often do not, belong to them -Closer to final purchaser -Britain, auction houses -Profitable sector, especially with Asia boom -wines typically sits in an unbroken case in a bonded warehouse in Britain while being traded profitably around the world. - Much of these brokers' trade is between their own established customers. -Much better model than traditional merchants who sold few bottles very often with high touch ...EX...Farr Vintners (wholesaler) regularly sell more wine than Sotheby's and Christie's combined.

Varietal importance (2013) (2004)*

-75% content for varietal label required in the US -Inglenook and Louis M Martini were first to adopt variety labels in modern times -Varietal labeling worked in US market where returning soldiers wanted wine but average person had no history to connect with. AVAs didn't exist, so concept was lost. -Fighting varietals lead to brand recognition of grapes as their own brand identity -In 1990s INAO wanted to eliminate all varietal labeling, even in Alsace -As varietal becomes more important block (not mixed) planting has become more important -DNA identify has linked regions all over, but some winemakers hate as they respect their regional influence creating a whole new flavor (not from the grape) -Varietal subverts terroir to grape flavor -"branding" of appellations, wine producing estates, and vineyard names promotes and plays off of exclusivity and price based on demand -varietal branding creates competition among brands, popular pricing, and greater appeal to a generally less knowledgeable consumer ...EX... George Skouras thinks greece needs iconic varietals to rise further ...EX... 'Meritage' is varietal to get Americans to understand blends, same with Rhone rangers

building large brands (2004)*

-High visibility is key, PR may be necassary ...EX...Coca-Cola Everything from the company's packaging, its social-media profiles to its television commercials draws on the same colors, fonts, motifs and experiences. A big part of Coca-Cola's success comes from its ability to transmit feelings and expectations through its branded elements. -appoint a single "brand czar" within your organization for one direction and coherent view. Involved with all packaging decisions. don't let anything your company produces interfere with the standards you've set for yourself. -Craft a story: Share the story of how your company came to be. -Use big data, chances are you are collecting analytics, now put them to work. Start by figuring out what metrics matter most for your company's success -run your reports, read through them and make at least three changes based on what you find. -At its core, branding should draw people in, interaction is key. campaigns that encourages participants to share -No matter how you approach it, find ways to encourage your customers to share their experiences with your brand. It's a powerful approach to community-building that serves the dual purpose of building brand exposure and awareness as well.

publicly quoted wine companies (2005)*

-Major issues: Capital, expectations of shareholder returns, transparency of financial results -Issues Impact: product quality, innovation, competition, consumer research and broader issues such as impact on the environment. -Constellation, Diagio, Vina Concha Y Toro, Willamette Valley Vineyards, Inc. examples of publicly traded companies *For Privately Held* -Forbes Magazine said in 2013 that spirits brands were better investments than wine brands (higher value added, more stable, yearly production) -Pressure to show quarterly returns for investors, may lead to artificial bumps and proliferation of skus. -Can be perceived as having no heart or passion -Investing in hard land capital valuable for privately held companies - especially with cultural definition about that land -Tighter work culture belief, easier transmission of data -less risk for liquidation of capital in hard times (publicly traded company can have cheap stocks bought up and then liquidate property for profit) *For Publicly Held* -push for innovation -expand much more quickly (easier to seek finance on the open market) -decisions made with elevated objectivity -Avoiding of family feud, hostile takeover ...EX...For the second consecutive year, Concha y Toro is catalogued as the most powerful wine brand in the world in the 2015 ranking "Power 100 Most Powerful Wine Brands", prepared by the independent consultancy, Intangible Business. ...EX...Constellation claims carefully to be 'the world's leader in premium wine' whose 100 brands, in 2014, included Robert mondavi, Clos du Bois, Rex Goliath, Ravenswood, Black Box, Simi, Wild Horse, Mark West, Franciscan Estate, Toasted Head, and Mount Veeder in California; Manischewitz (America's best-selling kosher wine) in New York; Jackson-Triggs and Inniskillin in Canada; Kim Crawford and Nobilo in New Zealand; and Ruffino in central Italy.

exchange rates (2009) *

-If imported costs of good are lower people will demand more -If domestic income or inflation rises demand for imports goes up -The more people buy good or invest in securities of another country the higher the demand for the currency (to buy those things) and the higher the currency's worth becomes. -The more people exchange domestic money for foreign money, the more domestic money is available and the more it depreciates. -Strong domestic dollar means lower exports as our products become expensive in other markets. This may result in lowered prices and smaller margins. This creates trade deficit where we import more than we export. ...EX purchasing of winemaking supplies will rise when Rand in SA is low as they need to import most of their equipment. ...EX weaker Euro during 2014 Bordeaux en Primeur will help sales now that 'North America wants to buy again' -Ch Moussas 2011 en primeur Bordeaux euro 1.31 for dollar (4/2012) 2014 en primeur 1.07 (4/2015) ...EX euro, down about 25 per cent against the US dollar and 10 per cent against the pound in 2015 for 2014 Bordeaux campaign compared to 2013 campaign ...EX...Glass manufacturer Verallia produces bottles in Europe. prices are about the same, approximately 1.5% higher per year based on inflation. Isabelle Le Graët, "Between 2013 and 2015, the exchange rate between the euro and the dollar also helped us to lower prices." ...EX...past year the US has raised interest rates and the EU has lowered them. Other currencies that are important to the wine industry such as Australia, Chile, and South Africa have also fallen but due instead to China's slowing growth. ...EX...Australian dollar and the Chilean peso are much cheaper making their wine exports relatively cheaper to dollar buyers both in the U.S. and in some other countries. ...EX...Post economic crisis lesson to not reduce sticker price. Instead many brands who have higher margin because of exchange rates are not cutting the price but instead investing more in sales and marketing

regulation in wine industry (2006)*

-Not including grapes/wine/packaging -Often done to protect consumers or raise revenue *CONSUMER PROTECTION* -regulation is not a guarantee of quality but instead to try and ensure authenticity and if possible consistency *Label design/marketing* -PDO/PGI: AOC type regs across EU, Traditional terms (PDO wines represented 44% of EU production), often confusing to customer -TTB: controls label approval, marketing terms, and online marketing in the US 3 tier system -Organic certification USDA ...EX...Eataly in IT fined for labeling 'free' to mean pesticides and additives. SO2 only 1/2 EU limit not free. Fined 50,000Euros for misleading *GOVERNMENT* -largely one of revenue raising but also as a means of controlling fraud as well as influencing the agriculture of a particular country *taxes* -Not surprisingly, taxes on wine have been perceived as a fast, easy way of raising cash and the state has shown no scruples in doubling or tripling them at times of emergency—often to pay for wars such as the hundred years war, the English Civil War, and the Napoleonic Wars. -can be seen as legitimizing business (no prohibition if meaningful revenue is raised) -differing taxes to reward or punish trade partners *alcohol abuse* -to reduce heavy consumption of alcohol (sin tax) -taxes may be used to encourage healthier drinking ...EX...US $1.07 per gallon, for wine with less than 14% ABV. $1.57 per gallon, for wine with between 14% & 21% ABV -laws surrounding safe sale and legal drinking age

Large retailer branding (2000) Supermarkets help or hurt (2015)* (needs Meiningers)

-Tesco joins Aldi and Lidl in fixed price model, instead of running promotions they have lowered btl prices. Now wines must fit this model. -40-45% of Tesco's wine range in Tesco brand wine -1970s and 80s big companies in port, realized not the right model and returned to family own style business EXCEPT Buyer's Own Brand (BOB) which does not have pull of brand image instead competes on price. -Lower BOB prices maintain volume in short term but reduce returns per linear meter of shelf space they own. -IVDP certification on BOB Port has given credence to value brands and stripped it of meaning. -Winter 2015, Discount retailers Aldi and Lidl now own a 10% combined share of the British grocery market, double their share of only three years ago, new figures have revealed. -Majestic boss Rowan Gormley says supermarket brands are more like baked beans than wine ...EX...David Trone, the founder of Total Wine & More, is hoping to secure the Democratic nomination to congress. He also committed to spending "whatever it takes" to win the nomination and the constituency. -Total wine uses promos on big brands i.e. Conundrum and then directs customers to own brand wine where margin is much higher. ...EX...Tesco buyer, "Tesco finest is worth more to Tesco than coca cola."

Family/Craft vs corporate (2013)*

...EX...Richard Hemming MW "The real division in Bordeaux isn't between the left and right banks, it's between the haves and have-nots." -Family does not mean small (Gallo) Corporate does not mean big Le Bon Pasteur in Bordeaux is small ...EX...While Hardy's has black and white family photos on website they are owned by CHAMP private equity and made by corporate ACCOLADE wines. Robert Hill-Smith, the fifth-generation vigneron at Australia's oldest family-owned winery, Yalumba calls it a con. Mr Hill-Smith is also the chairman of Australia's First Families of Wine, an association formed six years ago by 12 families who represent some of the oldest and most respected wine brands in the country. The families that make up AFFW include wineries such as Tyrrell's, Taylors, Yalumba, Tahbilk, De Bortoli, d'Arenberg, Brown Brothers, Howard Park and Henschke. Many corporate purchased wineries, like Hardy's keep family members on staff as brand ambassadors. Aussie consumer laws make it illegal to misrepresent and there has been a dust up that these corporate wineries may lose their trademarks. *Takeover* -Must consider the mechanics of a takeover, and how to focus on the people within the business. Who do you keep and in what role? -Various structures were used successfully, including SWOT and the 4 'P's. -Ways to succeed: Mix in old with new, be humble, bring value, put in optimal tax structure *Benefits of being family* -Primum Familiae Vini - the Leading Wine Families - a European-based fraternity of 11 that includes such hallowed names as Antinori of Italy, Vega Sicilia and Torres of Spain, Château Mouton Rothschild, Famille Perrin and Joseph Drouhin of France and Egon Muller Scharzhof of Germany. Message is families must band together to fight big corp. -Families are usually in the game for the long haul, willing to put in a lifetime of hard work to hand down a legacy to their children and to live the pastoral dream. -Big drinks conglomerates that have been so successful in the beer and spirits categories sometimes prove themselves poor-equipped to succeed in the wine market," Mike Veseth, author of Wine Wars and Extreme Wine. "One reason may be that beer's production cycle aligns pretty well with the short-term thinking that some big corporations tend to adopt, always worrying about next quarter's earnings ...EX...Port 1970s-80s multinationals came in (guaranteed dist with their other products, raise global awareness of port). Port producers focused on wine not sales and upgraded equipment. Recent return to family business as big players left understanding port is long term as they drew on stocks. Selling port now on the port companies themselves - world of supermarkets listing fees and multi language tough, but care is focused on long term. Big companies stayed on for Buyer's Own Brand (BOB) ...EX...Roberson's dropped all Grand Marquis Champ for grower. "We don't sell big brands as we prefer to root out wines made in smaller quantities with great stories behind them. Champagne has always been treated differently, with the big brands retaining an element of prestige that smaller growers find it difficult to compete with," said Roberson's marketing manager Lisa McCaghy. -Gallo has tripled its production in Napa Valley with the purchase of The Ranch Winery, a custom grape-crush facility with a capacity of 30,000 tons. *benefits of being Corporate* -Avoid family politics and end maladaptive behavior -Run on #s and returns -Can leverage better financing and change quickly -push for innovation -expand much more quickly (easier to seek finance on the open market) -decisions made with elevated objectivity -Avoiding of family feud, hostile takeover ...EX...For the second consecutive year, Concha y Toro is catalogued as the most powerful wine brand in the world in the 2015 ranking "Power 100 Most Powerful Wine Brands", prepared by the independent consultancy, Intangible Business. ...EX...Constellation claims carefully to be 'the world's leader in premium wine' whose 100 brands, in 2014, included Robert mondavi, Clos du Bois, Rex Goliath, Ravenswood, Black Box, Simi, Wild Horse, Mark West, Franciscan Estate, Toasted Head, and Mount Veeder in California; Manischewitz (America's best-selling kosher wine) in New York; Jackson-Triggs and Inniskillin in Canada; Kim Crawford and Nobilo in New Zealand; and Ruffino in central Italy.

Packaging (2014) (2003)*

...EX...in 2010 wine industry spend 10 mil on ads (shanken news) so packaging is major. -Packaging is one of the major promotional elements of wine, especially for smaller scale wineries with less capital. -US Wine Packaging Market Worth $2.9 Billion in 2019 and Global Wine Packaging Industry Growing at 2.53% CAGR to 2019 (Wine Packaging to 2019 paper) *Container* -bottles are still by far the most popular form of wine packaging, not least because glass is inert and tasteless so, unlike other packaging materials, has no effect on the wine even over decades. It does have the disadvantages of being very fragile, relatively heavy, and uses up considerable natural resources during manufacture and transport -An additional advantage of bag-in-box containers is their large surface area, which offers significantly more space for colorful graphics and text than do bottle labels. *Cost* Bottle: 0.20-0.95 Cork: 0.08- 0.35 Foil: 0-0.25 Label: 0.03-0.35 Bottling Process: 0.18-0.35 *Cases* -Are the good for case stacks? Do they need to add decadence or communicate quality? Small spaces? ...EX Barefoot learned from warehouse staff to color code labels and boxes for proper shipping and shelving (Forbes) *Label* -legal concern -The label is the primary promotional element (as of 2008 Wine a Global Biz) ...EX David Fonseca said that meeting labeling requirements in their 47 markets was a total nightmare. *Closure* -cork -screw cap ...EX...Fairview in S.A. uses each based on price tier. -t top -synthetic -glass (Vinoloc) ...EX...Dom Symington says glass stopper is not your seal a silicone ring is your seal and he doesn't trust that ...EX...Weingut Beurer natural cork for oak fermented, stelvin for stainless (matching material) *Foil* ...EX Barefoot extended down foil so fill levels and evap in wine neck were not visible to sooth customer minds. ...EX...As part of the company's bicentenary celebrations, Cockburn's has launched three brightly coloured, limited edition tins for X Mas holidays (gold red black) *necker* ...EX...Banrock Station went for green image, even attached tree seeds to necker to reinforce *EXAMPLES Outline:* Packaging over wine: -Pinot Evil Brasil Pinot to Hungary -Bitch Grenache Aussie Grenache to Spain, light weight reflect cost savings and fun vibe Wine to match Packaging: -Dufort-Vivens Claire Lurton likes the traditional, yet detailed style that communicated quality with a modern flair. Heavy weight paper and bottle reflect quality -Barefoot takes being laid back very seriously, light clear bottles, light paper stock Wine overcoming packaging -Louis Latour and Jadot little cost or change in vibe of packaging across line, no need Big packaging moves -Crystal hand wrapped UV, expensive and specialized -...EX...As part of the company's bicentenary celebrations, Cockburn's has launched three brightly coloured, limited edition tins for X Mas holidays (gold red black) ...EX...Banrock Station went for green image, even attached tree seeds to necker to reinforce

How does the media portray wine drinker (2000)*

*Upper-Middle Class, White Women* -Modern Family, Girlfriend's Guide, Sex and the city -Amy Schumer 'Football Town Nights' -shown as non sophisticated un-adventerous wine drinkers *Men* -Madmen and hyper masculinity rely on spirits and beer to deter from media image of soft, sophistication, and gentle part of gentle-man. Era market by John Wayne and lumberjack ideals to fight off socialization of office life. -Coupling, shown as slightly sophisticated purchasing from high street shops, 15GBP Bordeaux -The Bachelorette, Oaky CA Chardonnay, became way to seem smooth and cultural icon -Snooty yet rugged 'Sideways' drinker -Shown as more sophisticated and educated *General drinkers* -Much of what is portrayed in media is decided by baby boomers and increasingly gen-x, they will show wine styles much less adventurous than millennials who are spending more on less wine. ...EX...Natl. inst health in US: Among TV programs most popular with teenagers, 53 percent portrayed alcohol use; 84 percent of TV-14-rated programming, 77 percent of TV-PG programming, and 38 percent of TV-G programming depicted alcohol use. More episodes portrayed drinking as an overall positive experience (40 percent) rather than a negative one (10 percent) *older drinkers* -Sherry -sipping cognac -Often portrayed as drinking something from generation, though many are drinker newer and innovative wines -French Paradox encourages their moderate drinking *Indicator of Romance* ...EX...The Way we Were pink champagne, Man Seeking Woman goes to court for having glass with ex. *In Music* -Indulgence 'pink champagne got my headphones up high' -Trashy - Excess 'wine,wine,wine,' dust bowl song about wino hobos, Kendrick Lamar 'Swimming Pools' -Champagne and Chopin by Andrea Robinson *Art* -religious importance -Mouton-Rothschilds original art on label *Celebrities Making Wine* -Nikki Minaj prosecco, very sweet -Angelina Jolie and Brad Pitt making Rosé -Maynard James Keenan of Tool in Jermome, Arizona -Royal family member attending WSET classes

homogenization and commodification of wine (2004) (2003)*

*Yes Homogenized* -'Head of Tail' represents the blockbuster hits whereas the Long Tail represents the diverse interests of many. Surprisingly, there are buyers for even the smallest music groups online. The Head of the comet's tail is what is found by volume creating a pool of inherently homogenized wines by the very fact that small expressions loose their identity (mix enough you get brown) wine critic 'Parkerized' -A few central universities and research stations setting standard -Consultants giving generic prescriptions to many wineries, taking nuance and spreading it -Big box retailer looking for massive volume for discounting price -...EX...2004 documentary Mondo Vino: Michel Rolland learned from Professor [Émile] Peynaud and they have been 2 big voices coming from same culture and background. -Crush Pad *Yes Commodification* -Large bulk purchasing, funneling, and wholesaling of generic grapes for generic off-dry wines covering large area ...EX...Apothic, Menage a trois, yellow tail ...EX..Michael Mondavi said after buyout went from improving wine to making for bottom dollar - finance manager and distributors with power are creating commodity environment -Bulk shipping benefits commodity trading like never before ...EX...High amount of bulk wine trading in SA creating commodity bulk market that is growing, not shrinking *No Homogenized* -larger variety of techniques than ever before -better innovation -industry that still treasures tradition -thriving natural wine sector ...EX...David Bruce Fonseca-Guimaraens studies at Adelaide and brought more diversity to stuck in the mud port -In the late 1990s only 6% of wine held in big interest when compared to beer (35%) spirits (42%) soda (78%) -The vast number of winemakers are small boutique wineries ....EX...Boom in natural wines *No Commodification* -Large variety of brands with different reputations -High level of AOC and DOC, IGT wine with sense of place -Profitability in differentiation other than volume still viable ...EX...In response to this more complex environment, a few wineries are growing profits by actually getting smaller in volume. One of the most visible of these is Joseph Phelps Vineyards. In 1991, the winery was annually producing in excess of 120,000 cases of wine and had 26 products in its portfolio. Today, production is slightly under 90,000 cases and more than 80% is in three wines that are sold only through the three-tier channels. The three wines are Le Mistral ($25 retail), a Syrah/Grenache blend from Monterey County; Napa Valley Cabernet Sauvignon ($45); and Insignia ($125), a Bordeaux blend. But because of a strategy extremely focused on advancing quality, dollar sales have more than tripled and profits have soared — an unusual result among today's marketing schemes. -New World establishing designated terroir to differentiate soils (Luján de Cuyo, Argentina)

vertical integration (2009)*

-Definition: Assume ownership over multiple ladders of the supply chain -may not be ownership may be control ...EX...Estate vineyard in US with minimum 3 year already past and long term lease ...EX... Gallo ownes 20,000 acres but easily doubles that through long term leases -Vertical integration can help companies reduce costs and improve efficiency by decreasing transportation expenses and reducing turnaround time, among other advantages such as smaller margin. -However, sometimes it is more effective for a company to rely on the expertise and economies of scale of other vendors rather than be vertically integrated. -Family owned business find more value in vertical integration (owning diverse capital, reduced expenses) than publicly traded companies that dislike owning hard assets that are slow to liquidate and require long term investing to see rewards. -A company that expands backward on the production path has backward integration, while a company that expands forward on the production path is forward integrated. -Potentially gives more sustainable profit than other models -profitability and return on investment -Vertical integration can include production as well as distribution -Potentially Marketing of green means less vertical integration (less steps they take in operation the CO2 footprint is smaller) ...EX...Fetzer is opposite where returns to being a grape grower to have greater control for top expressions and lessen carbon emissions -Owning own winery and buying others ...EX...Gallo will buy wineries in other regions to meet labeling requirements for DOCG, etc. *Materials* ...EX... Gallo has G3 company that owns a sand mine, makes glass, and wholesales normacork synthetics and screwcaps ...EX... For Gallo the term 'cheaper to bulk ship' is not always true because they reach such good pricing from vertical integration of packaging supplies. They will export in package because even with cheaper labor in other markets the packaging takes care of extra US labor costs. They will recieve in Bulk like Barefoot Moscato ...EX...Gallo bottles more than 1 million bottles a year worldwide - massive economies of scale, potential for better margin ...EX...There is the 'trade rate' and the 'Gallo rate' which is a double digit minimum discount on corks, boxes ...EX..Gallo ownes co-manufacturing such as bottling line builders *People* ...EX...Gallo has own internal PR company with 4 full time PR staffers ...EX...Gallo keeps an internal design team ...EX...They employ manufacturing teams i.e. when La Marca Prosecco went into 187ml they sent the bottling line outfitting team there to fit the machine *Dist* ...EX... Sultan Road Otago NZ in UK has own license to dist and have their own clearning house, Nigel Greening the owner travels to UK to act as the dist himself and then someone else ships the wine to function as the distributor -DTC is vertical integration of dist ...EX...Pegasus Bay in NZ Waipara dist their own product to the greater Canterbury region. Elsewhere they use a dist, ...EX...Gallos biggest advantage is their dist. They are big enough to get their own book with dist. They train and incentivize the entire staff - essentially Gallo employees ...EX...Gallo owns 4-5 dist and works with 100+ in the US market

Australian Boom and Bust (mine) *

*Boom* -The 1986 boom began with low value of the Australian dollar which encouraged exports by reducing their price to foreign buyers. The AUD's low value was due to falling prices for mineral exports. -Vinyeard area doubled (1985-1995) and doubled again (1995-2005) outpacing the domestic market -Wine exports boomed, rising to 2.3% of all Australian exports by 2004. -Belief in the endless global wine market, that market could absorb any amount of wine put out -Wine prices increased, stimulating vine plantings, higher production and more exports but higher prices also limited domestic wine market growth making Australian producers more dependent on export markets. -Build rep on cheap wine and had to transfer to more pricey tags instead of bargain bins at discounters -Rising exports increased the incentive for investment in developing overseas markets for Australian wine, both through generic marketing and private brand promotion. Meanwhile, other countries also began to expand wine exports, too, contesting key market spaces. -The AUD began to rise in 2001 (driven by Chinese mineral demand). Competition in export markets made it difficult to pass through rising foreign exchange costs to export customers, so much of the burden was passed back in the form of lower AUD export receipts and, in due course, lower wine grape prices. -Meanwhile, the strength of the AUD made imports cheaper, including wine imports, which increased dramatically. Especially affected were Sauvignon Blanc imports from New Zealand (became top selling white in Aussie period) and Champagne imports from France. -Wine grape prices collapsed and the value of vineyard land fell, in some cases to the same low value as unimproved farm land. This is the bust that the Australian industry is still recovering from. *Bust* -This is not the first time that Australia has experienced wine boom and bust (1854-1871). In fact, according to Professor Kym Anderson, this is the fifth time Australian wine has experienced a wine boom. -The level of output was unsustainably high given modest Australian consumption, rising production costs, realistic limits to global market growth and increasing international competition. -drought -rising irrigation water prices -the global financial crisis -the rise of the Australian dollar (driven by mineral exports to China) -increased competition from other wine-exporting countries -China's austerity policies (which have reduced demand for luxury wine products) -vineyard heat spikes - wildfires -gradual but significant effects of global climate change

planning an export campaign (2009) (1999) creating successful export markets (2003) (2001) (1999)*

*Export over view* -pricing, quality, and space fierce competition -import tariffs, extra protectionist tariffs, and increased sales tax -labels and UPCs -language, customs, and delayed payment -strong mgmt and commitment to process -1st: particular market and set of dist channels are chosen that match companies ability to produce and market wine -2nd: quality must match on price, quality and price must match position -3rd with strategy and wine in place it must be executed perfectly -product and packaging must fit intended profile -follow through and momentum -Single market at a time is wise -Country with or without wine culture? -how educated are the dist and sales team -how much wine do you supply, what will your local market drink, what must be exported (how big a market?) -long term process of investing to maintain campaign *responsibilities* -2nd person info collect about target market, investigate potential partners, reach out to export advisory service from govt or trade assoc provide info about target markets, potential partners -Marketing manager or VP: head up export campaign -National and regional sales manager: responsible for territories, oversee dist system, set targets, sales and promotional materials, work with brand managers, set prices -May be overlap in an export market -Brand manager: maintain specific brand positioning, packaging, advertising, and promotions ...Kingston Estate bulk wine can used BoB (buyers own brand) (Scandinavian monopolies, UK by the glass cafe, or commercial wine segment in NZ) to enter market at the housewine. Can launch second wine from there, especially if you over deliver ...EX... Banrock station domestic and export to uk nearly same plan, reinforced image and message ...EX...Bartonvale wine exported immediately from Aussie, could not compete in crowded market, wanted cult status important to other markets. Choosing dist vital (4 pages of questions)went with portfolio of other barossa cult wines. Priced base wines at 20-30$ to build rep to support higher bottling

producer to consumer contact (2010)*

*In Market Face to Face with buyers* -Brings Authenticity and attention of account -Wine dinners -Ride Alongs -Conventions -Competitions -Education Tastings ...EX... Dave Pickerell from Makers Mark developed well curated stories to grow over intimacy of relationship, cult of personality. Rob Samuelson who replaced needs more personality training. ...EX...Jean Trimback vs Roman Bratasiut *New advertising opportunities for general public* -Facebook ad for Mark West gave 25% new purchaser sales lift, 11% lift from current buyers, 20.7% lift in household penetration, reached 19 M wine buying households, 151 M impressions over campaign -Christoph Keller of Moneky 47 -Excellent for repeat customer purchase at low cost *Personal Social Media* -Training is vital -Immediate exposure at intimate level -Kermit Lynch get company contact less valuable then personal connection like Fernando Mora of Spain -Timelapse cameras ...EX...Riedel threatened HoseMaster with defamation and he posted calling him a bully, had to SM apologize. *Dissemination of personality* -tasting notes, comments, vision -Bringing notebooks and showing tools -Collaborations bring you to a new audience with cross over -Charity opportunities Luiz Alberto and #WineLoversAgainstCancer

Label Design

*What factors would you consider when creating a brief for a wine bottle label design?* Communicating Brand Image: non-literal images, company history ...EX...Place Creative requests a portfolio of images to create vibe not to be used though Legal Requirements: What markets, what needs ...EX...France does not require back label, TTB is US does Cost ...EX...0.06 cents per label to add foil trip to label on run of 10,000 labels ...EX...Original dye tray $45 for cutting, cheap to change Application Will it require a re-working of you existing labeling machine? Will wine spill on the label? Will the paper get marked up? ...EX...Tapered label 10,000$ more on ENOS T3 bottling lines. Volume How many will you need in a run and how quickly/on demand will change design Transportation ...EX... Privateer Rum local sales then shipped to CA, opened cases and foil was rubbed off Digital Interaction: photograph well, 'sharable', easy hashtag ...EX...Krug Codes

control of fine wine market (2008)*

*producers* -As the creators of high demand wine they have much choice on which direction the wine goes - La Tour leaves en Primeur - From the 2015 vintage, Bordeaux first growth Château Mouton Rothschild will be offering fewer wines en primeur due to a rising demand for wines in bottle in Asia. They say their cellars are too empty after en Primeur -Callar sales ...EX....2011 vintage Port, much reserved for sale at cellar door *Distributors* -Brokers, Auction houses, portfolios, négociants -control over where fine wine goes in the market ...EX....US 3 tier means total control over product availability -En Primeur négociants means taking valuable wines and controlling their delivery to top buyers. Negative, pressure to buy all they can every year may get stuck with bad stock *Trade* -German listing fees charged to producers to make products available on the shelf -Unlikely to struggle to sell stock -Use fine wine to build trade brand -Competition among trade outlets to get fine wine *Consumers* -final purchaser -more and more choice as wine regions mature -better and better values available -can go to regions that have top vintages *Media* -can swing fashion ...EX...Parkerization and reaction -perception is reality

brand manager skills (2007) Key stats to measure success (2015)*

-Tangible elements of brand management include the product itself; look, price, the packaging, etc. The intangible elements are the experience that the consumer has had with the brand, and also the relationship that they have with that brand. -Track consumer and market insights by reviewing metrics such as sales volume, market share, profit projections, pricing and distribution, and by conducting consumer research . -process of creating a relationship or a connection between a company's product and emotional perception of the customer for the purpose of generating segregation among competition and building loyalty among customers -Brand management is a function of marketing that uses special techniques in order to increase the perceived value of a product (Brand equity). Based on the aims of the established marketing strategy, brand management enables the price of products to grow and builds loyal customers through positive associations and images or a strong awareness of the brand. -Brand orientation refers to "the degree to which the organization values brands and its practices are oriented towards building brand capabilities" -The fast pace of technological development and the increased speed with which imitations turn up on the market have dramatically shortened product lifecycles. The consequence is that product-related competitive advantages soon risk being transformed into competitive prerequisites. For this reason, increasing numbers of companies are looking for other, more enduring, competitive tools - such as brands. -Brand managers are responsible for ensuring that the products, services and product lines that fall under their domain resonate with current and potential customers. To do so, these professionals continuously monitor marketing trends and keep a close eye on competitive products in the marketplace. They also regularly meet with clients and senior management, and they oversee a team of junior marketers. -Working under marketing managers or CMOs, brand managers serve as the point-person for developing, implementing and executing marketing initiatives and activities for their particular brand. These initiatives and activities include campaigns (print, web, social media, broadcast, etc.), events, corporate responsibility programs and sponsorships. -Brand managers conduct initial market research for a brand, gathering data about where a product fits in with the rest of the market. This includes polling demographics, discovering demand for a product, and asking people what makes a particular product stand out. After extensive research, brand managers develop monthly objectives with their team with the goal of increasing a brand's value. This includes developing marketing strategies and introducing the brand to the public. Throughout a brand's life, the brand manager reports to higher level marketing staff about sales, how marketing strategies are affecting those sales, and how a brand can reach even more consumers.

mergers (1999) *

-When a winery consolidates with a larger operation, they may receive the benefits of reduced production cost and expanded distribution -Many large wine firms own more production input such as equipment, bottling lines, or trucking that will significantly reduce the costs of wine production. Also, good dist relationships -Many distributors prefer to work with wine firms that have a diverse portfolio which means having numerous labels at different price points ...EX...Many small wineries in US have fallen under the ownership of larger wine producers such as E&J Gallo, Constellation, or The Wine Group. These top 3 companies account for 50% of the total wine market in the United States with a combined volume of 150.3 million cases (M. Shanken Communications 2010). ...EX...Medium sized wineries (100,000 to one million cases a year) are experiencing the most pressure to consolidate because they cannot charge the premium price that boutique wineries can, nor can they get priority from distributors because their volume of wine produced is not nearly as much as the volume of the top producers (Bird et al. 2002). -Consumers of wine will benefit substantially from consolidation and acquisitions in the industry -approximately 14 more major transactions took place in USA 2006 and 2007 that involved wineries and brands worth over $40 million dollars each -When the economic crisis began in 2008, many of the wine industry giants slowed down their merger and acquisition frenzy because like the rest of the economy, they were not in the condition to buy more brands. -Vertical integration is one that creates innovation within a company by making a new product line under the same company. -An acquisition, on the other hand, is one company buying out another -In response to the recent economic downturn, the wine firms trended towards horizontal mergers in order to combat disintegration of smaller wineries that could not gain access to distribution. larger wineries can gain profits once the smaller wineries that they merge with gain name recognition. This name recognition is garnered by bargaining power of the larger wineries that already have recognizable (and thus economically profitable) labels. -Horizontal integration has been a trend with major wine companies in the United States such as Gallo, Constellation, and Kendall Jackson. -A second reason for consolidation according to Bird et al. (2002) is the alcohol distribution system in the United States, which was implemented after the Prohibition era. It is time consuming and expensive. Besides the difficulty and time factors, selling direct to wholesalers has become an issue because distributors are consolidating as well, making it difficult for any winery that is not a part of a large producer to find distributor representation. ...EX 4/2015 UK retailer Majestic Wine has bought internet retailer Naked Wines with a clear ambition to exploit new markets in the US and Australia. -

Implications of a large harvest (2014)*

-creates friction for wineries looking to raise prices -dampens global prices -buoys bulk wine market, negociants -recent recession masked under planting of global grapes -2000 last period of oversupply -2012 large crop brought relief to CA, setting record, over 4 million tons of grapes harvested. -2013 good too, bulk wine grew stronger. -pre 2012 5 million gallon available post 2013 15 million. -2012 weak in Europe though, 2013 larger and export bulk wine market gained strength -As people run out of tank space wine is sold off, especially late season, at low price. -2015 Italy largest wine producing country in world (title from France 2014). High quality at low prices meet consumer expectations. ...EX...Imp for Champagne houses and Port Houses to bulk up on stocks. Taylor-Fladgate says it builds backbones of their blends ...EX...South Africa Drought over Summer (Nov-Jan 2015) lead to reduced crops, increased prices ...EX...CA according to Steve Fredericks, president at Turrentine Wine Brokerage. Prices have eased from preseason levels, and in some cases dropped $4,000 per ton. ...EX... Wine business monthly reports over 75% of US wineries planning to purchase tanks for 2014 as a result of 2012 and 2013 large harvests ...EX...New harvest: Sam Linter, md and chief winemaker at Sussex vineyard Bolney Wine Estate says rising production of English sparkling wine was likely to result in large quantities hitting the market over the next two years. Smaller companies may struggle to find route to market in the noise.

The Importance of Tourism (mine)*

-enotourism can consist of visits to wineries, tasting wines, vineyard walks, or even taking an active part in the harvest. - Napa Valley AVA, it saw heavy growth once a concerted marketing effort was implemented in 1975 [3] that was given a further boost by the 1976 Judgment of Paris -Other regions, such as Catalonia, Spain have only started marketing enotourism starting in the mid-2000s, primarily focusing on how it is an alternative form of tourism to the beach for which Spain is overall known -In the United States 27 million travelers, or 17% of American leisure travelers, engaged in culinary or wine-related activities. In Italy the figure stands at approximately five million travelers, generating 2.5 billion euros in revenue -A private initiative by Recevin holds an annual "Enotourism Day" on the second Sunday of November each year to promote cellar visits in Germany, Austria, Slovenia, Spain, France, Greece, Hungary, Italy, and Portugal. -Very small, low production regions such as Priorat, Catalonia focus on small, intimate visits with the owner as the host and include walks through the vineyards to help visitors understand the unique qualities of the region -Cellar door sales offer largest possible margin at lowest cost to producer -The "experiential economy" is one of the most important trends in travel, and it is particularly relevant to wine tourism. The wine experience is driven not only by wine, but the people and community behind the wine. Visitors want to be immersed in the culture of wine-making, agriculture and become - maybe only for a day but hopefully for much longer - a part of the winery's community. -D'Arenberg's Cube: 11 million AUS, McLaren Vale Cellar door scene, -Port (notes)

price promotions (2014) (2002) (1999)*

...EX Forbes, sales for NA at Croft feels that price promotions can be dangerous as getting the price back up is always at issue, people enter category at lowest price, if burned they will never return. -In UK Champagne has been hit hard by promo pricing as consumers become spoiled and prices cannot return to normal -Promotions are good for holidays as as infrequent customers enter the shop and regs buy more -super promotions can damage brand image, impact quality image -UK use price as sole way to promote wine sales -value added non price change promotions are better way to get sales for a brand (buy 3 wines get a corkscrew) -Best promotion is tasting, but may be expensive for brand, important to match it to the buyer ...EX selling below cost : Pierre Darcys label, which is supplied by cooperative Union Vinicole des Coteaux de Bethon (UVCB), offer for £10 a bottle (Holidays 2013), making it the cheapest on the UK market following the Champagne's near £15 price drop from its off-promotion price of £24.25. (kilo of Champ grapes €5.60 (£4.70) in 2012, appx 1.2 kilo of grapes per bottle, UK duty sparkling wine is £2.56, VAT is 20%, costs of packaging, production, retailer margins, doesn't add up)

grape fashions (2003) (2002)*

...EX...New fashion for 'Munier' to be single variety bottled in Champagne ...EX...New fashion for single varietal cava following steps of single varietal Champagne ...EX...Mertiage society, using Bordeaux grapes in CA, blip in 2005 and has fallen off. Addressed issue of non varietal label red blends in CA -Bonney Doon did much for Rhone varietals -Merlot and Sideways ...EX....A.C. Nielsen analysis showed PN hitting record levels, up 16% in the months after Sideways ...EX...Malbec in Argentina great replacement for Merlot but now interest is waning and alternative grapes don't have sway like other regions. Millennials are less interested in Varietal and iGen is also less interested. More consumers with less general education. Generic Red Blends. Baby Boomers Varietal important with little experience but some international exposure.

DTC

...EX...Overall, an average of 47% of DtC revenues were derived from tasting room sales, 33% from wine club members and allocation lists, 8% by web, mail and phone sales, 5% from events and 5% from other direct channels.-Silicon Valley Bank and Wine Business Monthly study of CA wineries. Those responding generate an average of 60% of total revenue from direct-to-consumer (DtC) sales, with the percentage dropping from 74% for wineries producing fewer than 2,500 cases to 15% for those making more than 250,000 cases.

Acquisitions

4. As a large corporation taking over a family wine business, should you keep the family values alive and, if so, how? Fetzer Brown Forman Stregthes -Yes, focus on sustainability and allowing Paul Dolan to take lead kept it from seeming corporate. When sales struggeled they resold the winery to Concha Y Toro, another publically traded company, not representing the family long term investment plan. Weakness Can loose the appeal of why people loved it if you change Public traded wants less hard capital which can lead to less diversified capita - better to run as family and invest in capital (strength of family Gallo) -transition into opportunities The Prisoner to Constellation bought grapes from 80+ growers in Napa Constellation can do it better with better buying power. -Lost rights to grapes, will it reflect terroir? Not be terroir style best to go non family Opportunity Le Bon Pasteur 1st GC property in Bordeaux to Asian Investor, change from family style to meet needs of a more reliable customer and change marketing strategy. Did keep Rolland on to keep spirit alive 1987 LVMH takes over Veuve, Luxury as luxury- great for them to market this and have woven historical story in. Took the best and merged with big biz attitude Threats Sometimes they sold because they were not going well, keeping values could run into the ground Can mean breaking long term relationships that were not healthy Short term bridge contracts can cause scrambling (Hanger One and St George)

How do brands affect consumers (1999)*

Brand= products marketed on the basis of their name and image rather than on their inherent qualities -IMPACT Databank calculated that the global market share of the top 25 wine brands in the world, while having grown significantly since the mid 1990s, was still less than 8% by 2004 -US brands account for 50% of all wine sales -fragmented nature of wine market makes brand promotion expensive, and brands can seem like poor value -Wine brands offer a familiar lifeline to new wine consumers baffled by a multiplicity of unfamiliar, often foreign, proper names -brands are most sought after in embryonic and fast-growing markets, such as northern Europe and the rest of the English-speaking world between the 1950s and the 1980s, and in Africa and some Asian countries today. *Define a style* ...EX...Blue Nun gave perception of all german wine for decades (good and bad) *Explode a region (receiving region or producing region)* ...EX....Lancers introduce vinho verde to the New World, especially US and began wine culture ...EX...Yellow Tail introduced Aussie to world *Shape tradition* ...EX...Brand Champagne *Build a sector* -Fortified wine sector built on brands ...EX...Harvey's and Tio pepe

Fragmented Market

Categories: buyer power, supplier power, substitutes, new entrants and degree of rivlar *buyers* includes supermarkets, on-trade, specialist retailers, convenience stores and others. Supermarkets distribute 41% of the global supply and have the ability to negotiate with suppliers on price, but their power is quite limited overall because they ultimately must offer a variety of wine origins, types and prices to their customers. Buyers do have one advantage, and that is that switching costs to other producers are not high. Globalization has certainly impacted the way *suppliers* approach grape and wine production. Some companies may be vertically integrated (producing the grapes, wine and bottling), while others source grapes for low-quality wine and produce grapes for their high-quality wine. Because the end product is so reliant on the first stage of the value chain (grape production), independent suppliers can hold significant power and this remains a highly profitable area. The wine industry is heavily challenged by *substitutes* of spirits and beer. For retailers, for example, the cost of switching out of wine and into beer is not high seeing as it might even be a more efficient allocation of space. For pubs, it could also be the case that switching out of wine and into beer would be more profitable. Yet, for restaurants this remains problematic because of the cultural associations with wine. This area is highly dominated by consumers, and makes substitutes an increasing concern in the industry. *Entering* the wine industry may be simple for new companies that seek to differentiate themselves on price, but a large barrier to entry is the distribution channel. A company must have an active and well established connection of distributors through which they can reach a broader market in order to successfully compete in the global market. As was already established, supermarkets can have significant buyer power when negotiating price. This could complicate market entry. Strict government regulation, as was the example with New York, Utah and Kentucky, also provide barriers to entry. Given the plethora of wine varieties, the market is far from consolidated and highly competitive. Low switching costs, the ease of access to quality wine, and the access to information about wine places a higher emphasis on producers to meet stringent demands.

where is profit in wine (2010) (2004) Increasing wine profit (2008) (2004) Producer, Imp, Dist, retail, restaurant (2015)*

Define profit, clearly separate it from margin In Volume vs Value -Volume old model, Value ...EX..Casella with Yellow Tail tanks across AUssie - no where to put it ...EX...Value for Phelps winery important as resources become rarer and people buy less and better ...EX...Argentina brands make higher priced less volume wines as labor costs rise and profitibility on cheap brands falls with currency. Ortega's Massimo line discontinued for this reason. ...EX...Moscato's volume inherently hindered new callenge to grow in value as build on price ...EX...Sherry En Rama a move towards value over volume *Not in production* -grape growers highly dependent on fashion and large investment that is time consuming, takes another year for profit to come in ...EX...Prosecco growers have upper hand in 2015 but many hard years in past -Channel consolidation and increasing competition (characterized by severely declining numbers of wine distributors and by an escalating number of wine SKUs on the U.S. market) makes it hard for dist. They in turn squeeze winery profits as their sales and marketing costs are escalating by 20% to 30% annually, and each year wine inventories require considerable pushing through the wholesale system by winery as they only fulfill. -marked time investment for fine wine -Low agaility as producer has ownership through chain. *In Production* -Cheapest cost of materials -High value added -Potential for high return on investment (land, tasting room for higher margin, long term staff) -Potential to see profit burst over year (white, red, oaked white, oaked red, etc.) *Not in Distribution* -Margin of 20-30% -The combined dynamics of channel consolidation and increasing competition (characterized by severely declining numbers of wine distributors and by an escalating number of wine SKUs on the U.S. market) have made it much harder for wine businesses to market and sell wine. *In Distribution* -Low overhead ...EX...Volio Vino's reliance on internet means small alternating premise warehouse and limited office space. -Very little value added at relatively high margin -High ROI (little overhead, medium to long term employees, little value added for high margin, producer concern to help push wine) -Low time investment and potential for fast turn over of product -Pass challenges of rising cost, competition, and expense by squeezing producers -Seasonal bumps, but year round income ...EX...BC distribution by govt makes all money there as retail opperate at 16% margin compared with 17% cost of opperating. *In Final Sale* -Margin of 20-30% retail -Margin 300% on bottle on trade -Margin of 500% on glass pour on trade -Generic wines under house label huge profit center for retail (Total Wine) ...EX...Lucy Clemens says Tesco's Finest is more valuable to them than coco-cola -Seasonal bumps, but year round income -opportunity for immediate turn over *Not in Final Sale* -Restaurants famously fail and unprofitable -Overhead of brick and mortar high -Difficulty of online retail (warehousing and logistics of semi perishable good) -Low/moderate potential for return on investment (potential for high turn over, large storage, sitting inventory as highest price point, some value added) ...EX...Alibaba may challenge this as they enter large pushes for Italian wine.

Champagne competing with cheaper brands (2005)*

Easter of 2016 sales in sparkling wine solid, with a slight decline, while overall champagne fell a marked 5% in value showing consumers reaching for other wines. ...EX...Tesco sold 7.50 GBP champagne this season *Drink less and better* -growth of Prestige cuveé, important to the large and still growing uS market. -unique terroir and quality ...EX...Gosset 15 CIVB and control of name: -May 2013 champagne recognized in China -Late 2011 Russia stopped using Soviet Champagne -Centuries of history of brands and marketing -Overall high quality and consistentcy Houses and Growers and blending -Evolved over history to have a strong community and effective business releationship -The blending that is then required to make a house style in a delicate wine from the plots ...EX...Krug keeps 7 vintages of reserve wine around *Control of Dist* -USA #1 consumer of prestige cuveé -France, UK, then USA -Prestige -Visibility -Players in every market -Seasonal logistics Large Margins give large investment in long term marketing and thinking (luxury brands have run it well) *Innovation* -Nigerian (high growth not overall sales) and other Markets -Asia ...EX..austerity measures having an affect, strongest growth rate of any market -Social Media -Millennials: as they age will drink better ...EX...Veuve Cliquot Rich for cocktails and Moet Ice Imperial -Dosage Should Stay the course as oppose to chase trends -It is bought when people are happy and celebratory ...EX... Austrian wine created 3 tier quality level in Nov 2015:Klassik (any production 9 mo lees), Reserve (single Austrian state, bottle ferm, 18 mo lees) and Große Reserve (single muni, bottle, 30 mo lees) ...Ex. Krug ID code brining customers transparency and main route to China

advantages/disadvantages of small/family estates (2011) (2009)*

Yves Cuilleron Laura Catena Dirk Niepoort Mike Ratcliffe ADVANTAGES *Long Term Investment* ...EX...'In 1990, Lalou Bize-Leroy bought half a hectare of Romanée St-Vivant grand cru for 1 million francs,' recalls a Vosne producer. 'Everyone thought she was mad. Today it would be worth 20 times that.' ...EX...In Burgundy 'My father used to say that every three generations outsiders arrive and buy the vineyards. Eventually, they get discouraged and sell up, leaving locals to take over again,' recounts Etienne Grivot of Domaine Jean Grivot in Vosne. *Specialized Knowledge* -Grower Champagne nearly differentiated by being independently held and they have knowledge of plots that brings a unique flavor instead of a standard flavor -In the modern world of big brands and high-volume production, these family businesses stand firm by controlling everything from growing, vinifying, crafting and bottling. ...EX...The Clape family in Cornas only makes Cornas and knows it better than a large brand that may naturally apply generalized expertise for efficiency. *History and Modern Flair* -Yes they have a legacy to protect but they often want to stand out bringing fresh energy to heralded names ...EX...Johannes Hirsch converted every Hirsch wine to screw cape, visionary in his time ...EX...Still red wine in Portugal by Dirk Niepoort, 41, is a revolutionary in Portuguese wine. The descendent of a centuries-old Dutch port-producing family, Niepoort runs an import-export company with his partners, is one of the leaders of the collective that makes the wonderful Lavradores de Feitoria table wines, oversees his family's top-notch ports, and makes what is arguably Portugal's greatest red, Batuta. *Sustainable Practices* -Environmentally ...EX...Gallo is one of the most recognizable names in the wine world, yet Gallo Family Vineyards is still family-owned and is at the forefront of the sustainable agriculture movement. Under the guidance of third-generation family members Matt Gallo and Gina Gallo, the winery takes pains to plant only half its acreage to grapevines, leaving the other half in its natural state -Financially ...EX...Jason Hass at Tablas Creek serves as General Manager, learning from his father. In all cases the second generation is taking a leadership role in helping Paso Robles achieve its full potential on the national and global front. ...EX...family and trust that are the key elements and that the cooperation and commitment that Casella and Deutsch (Yellow Tail Dist) have demonstrated would not have been possible if either of them had been a public corporation, beholden to shareholders and driven to meet quarterly profit targets -Culturally ...EX..Despite being only 32, Mike Ratcliffe of Warwick Estate is one of South Africa's foremost wine statesmen, leading the charge for a forthcoming label designation, "Cape Blend," for reds containing his country's signature Pinotage grape. DISADVANTAGES *French Inheritance Laws* -President Sarkozy's 2007 law raising the inheritance tax threshold from €50,000 to €150,000 (£40,000 to £120,000) helped average taxpayers. But, since assets worth more than €1.7 million (£1,350,000) are taxed at 40%, it did little for wine producers with high vineyard values. ...EX...Eric Rousseau of Domaine Armand Rousseau in Gevrey-Chambertin recall that 'after the Second World War, the income from a single harvest was enough to pay off inheritance tax on one hectare of Charmes-Chambertin grand cru. Today it would take 10 years. *Hard to focus on other goals* ...EX...When Fetzer sold it freed up mental space to allow focus on sustainability when business worries were off shoulders. ...EX...Benzinger sold in order to scale up to premium levels, a game they did not know how to play *Inherited Problems* ...EX... Julia Flynn Siler, whose book "The House of Mondavi" shocked Wine Country in 2007 with its infighting revelations about the Mondavi dynasty. "Look, 70 percent of family businesses don't make it from one generation to the next," said author Siler. "An even smaller percentage makes it from the third to the fourth. So this sort of thing happens very regularly in family businesses. There's always a lot of interest in that." ...EX...Gary Heck, the 61-year-old Korbel owner, and his daughter, 39-year-old Richie Ann Samii. Suing each other for damages and Gary has restraining order against his granddaughter. Samii is set to inherit 5% of company no matter what